Ex- ante regulation to enhance digital competition in the European Union

Bruegel, the economic think tank based in Brussels, released an article about the Digital Market Act (DMA) regulation, which will ensure a higher degree of competition in the EU’s Digital Markets, by preventing bottlenecks from the so-called “gatekeepers” and allowing new players to enter the markets. Final regulation could be approved during the first half of 2022, under the French presidency of the Council of the EU.

Key findings of the article:

• What is the DMA regulation about? It is a European regulation that will impose tailored obligations to “gatekeepers” of the digital world, to address competitive concerns that arise only if a company is big enough to hold a high degree of market power. This regulation aims to ensure a higher degree of competition in the EU’s Digital Markets, by preventing large companies, platforms that act as “gatekeepers”, from abusing their market power avoiding the entry of new digital players.
  
  
• What is “a gatekeeper”? It is a digital market bottleneck, which operates a ‘core platform service’ (CPS), which is hard to avoid by “EU businesses and consumers” if they want to operate digitally. The DMA defines qualitative and quantitative criteria to be considered a “gatekeeper”:

- Core platform services: The DMA would include online intermediation services, online search engines, online social networking services, video-sharing platform services, number-independent interpersonal communication services, operating systems, cloud computing services, advertising services provided by a provider of any of the services listed before.

- Qualitative criteria: According to the Commission’s DMA proposal, “A CPS provider may qualify as a gatekeeper if it meets three qualitative criteria: has a significant impact on the internal market; it operates a core platform service which serves as an important gateway for business users to reach end users; and it enjoys an entrenched and durable position in its operations or it is foreseeable that it will enjoy such a position in the near future.”

- Quantitative Criteria: The Commission’s DMA proposal set these criteria based on annual turnover (equal to or above EUR 6.5 billion in the last three financial years), market capitalization (at least EUR 65 billion in the last financial year), number of states in which the CPS is provided (at least three Member States) and number of users (for instance more than 45 million monthly active end users established or located in the UE).

• The scope of the Digital Markets Act (which companies could potentially be considered “gatekeepers”) has been one of the most contentious issues in the regulatory discussion, according to the article. In fact, the final quantitative and qualitative criteria could change as the Council proposal differs from the Parliament and the Commission. The ‘GAFAM’ (Google, Amazon, Facebook, Apple and Microsoft) are always classified as gatekeepers under any of the proposals.