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EU Digital Markets Act delayed until 2023

EU Digital Markets Act delayed until 2023

The Digital Markets Act (DMA) has been postponed to come into force in early 2023, rather than later this year as previously anticipated.

“The DMA will enter into force next spring and we are getting ready for enforcement as soon as the first notifications come in,” said Commission EVP Margrethe Vestager in a speech to the International Competition Network conference in Berlin.

Vestager explained that the delay is a result of the extended preparation process: “It’s about setting up new structures within the Commission, pooling resources from DG Comp [Directorate-General for Competition] and Cnect [Directorate-General for Communications] based on relevant experience. It’s about hiring staff. It’s about preparing the IT systems. It’s about drafting further legal texts on procedures or notification forms. Our teams are currently busy with all these preparations and we’re aiming to come forward with the new structures very soon.”

The DMA was first approved by EU legislators in March. When in full force, the DMA will designate big tech companies such as Meta and Apple as gatekeepers, and these companies will need to declare their status the EU within three months.

The criteria for these gatekeepers comprises of them being “a core platform service” with “significant” impact on the EU’s internal market; a market capitalisation of at least €75BN (or an annual turnover of €7.5BN); at least 45M monthly end users in the EU and 10,000+ annual business users, as well as an entrenched market position means the usual GAFAM giants are certainly in the frame. The EU will then have two months to confirm their status.

The Commission will be responsible for keeping these big tech companies in line with the regulation, although Vestager suggested cooperation is already being undertaken as part of preparatory work. The Commission also requires interoperability among messaging, voice-calling, and vide-calling services.

“For that next chapter, close cooperation with competition authorities, both inside and outside the EU will be crucial,” Vestager emphasised. “This is irrespective of whether they apply traditional enforcement tools or have developed their own specific regulatory instruments, like the German digital regulation. Close cooperation will be necessary because we will not be short of work and we will not be short of novel services or practices to look at. And the efforts needed at a global scale are enormous. So we will need to work together more than ever.”

Vestager warned, “It goes without saying that the more we, as an international competition community, are able to harmonise our approach, the less opportunity there will be for global tech giants to exploit enforcement gaps between our jurisdictions.”
Penalties will be imposed on those who fail to comply to the DMA rules, including a fine of up to 10% of said companies overall worldwide annual turnover - this could be doubled with repeat infringements.

Bernd Meyring, partner in the Antirust & Foreign Investment Practice at Linklaters commented: “The DMA has sailed through the legislative process at record speed. The practical question is how quickly we will see its effects on digital markets. Gatekeepers are only likely to need to formally comply with the DMA’s obligations as of the Q1 2024 at the earliest and there will undoubtedly be wrangling as to the scope of some of the more expansive obligations. But formal adoption fires the starting gun and we should now start to see what the DMA means for various business models, as gatekeepers, their counterparties and the Commission work out what the obligations entail in practice.”

William Leslie, counsel in the Antitrust & Foreign Investment Practice at Linklaters also stated: “Not all amendments that dominated the debates over the last months have made it into the final text of the DMA. But the inclusion of voice assistants and web browsers in its scope of regulated digital activities, the adoption of rules on interoperability between messaging services and the imposition of strict rules on obtaining user data for personalised advertising have all meant that the final text has ended up having more teeth than the initial Commission proposal. A unique achievement in itself, and a telling indication of the direction of the current regulatory winds.”

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