The Digital Markets Act

by | Jan 23, 2023 | Antitrust

A new tool for small businesses

The EU Digital Markets Act typifies the new, aggressive, efforts of competition authorities, including those in the United States, to keep markets open. This new law stops big tech companies from engaging in practices which the EU Commission has, in the past, found to violate competition law. Thus the Digital Markets Act is, uniquely, ex-ante: it stops tech giants from engaging in anticompetitive practices before they commit them. The European Commission used past competition law cases to determine which obligations it will impose on digital platforms.

The European Union specifically designed this new law to protect individual end users and small business users from big tech abuses. Small business users in particular should use the Digital Markets Act to protect their business.

After the European Parliament passed the EU’s Digital Markets Act it came into force on Nov. 1, 2022. The European Commission will designate what it calls gatekeepers, big tech firms that offer a core platform service. These are the digital services, such as Amazon, or a search engine, such as Google, we all use.

An online platform which the European Commission has designated as a gatekeeper has a number of DMA obligations, which not just the European Commission but the competition authority of each member state as well will use to keep the digital sector open, and many of which are particularly helpful for small business users:

  • A gatekeeper must allow business users and end users to freely communicate.
  • A gatekeeper must allow users to install apps even if they do not use an app store.
  • A gatekeeper must allow end users to access the marketing data available on the digital platform. This will allow more effective targeted advertising.
  • A gatekeeper must protect an end user’s personal data.
  • A gatekeeper may not use a business user’s personal data to compete against that business user.
  • A gatekeeper may not require an end user to use other digital services or digital platforms.

The Digital Markets Act also requires tech companies to tell the European Commission of other firms they buy. The European Commission will use this information to stop gatekeeper companies from buying small, nascent competitors. These are also called killer acquisitions.

While it is implementing the Digital Markets Act the European Commission will hold public hearings. Users, including small business users, should use this opportunity to tell the European Commission of their experiences using tech platforms. In particular, small business users should tell the European Commission how they believe it should check the tech giants market power.

Not only will the EU Commission enforce the Digital Markets Act, but so too will the national courts of each member state, where the Digital Markets Act is fully enforceable. All the authorities will thus work together to make sure every digital service, and thus the full internal market, is open and competitive.

Further, regular users, including small businesses, can themselves directly enforce the Digital Markets Act. EU competition law allows small businesses to join together in class actions, or as they are sometimes called collective redress, and together ensure that they can use every European gatekeeper platform to expand their businesses.