The walled gardens operated by big name players in the tech industry are under threat after the European Union last week agreed landmark digital rules to rein in online ‘gatekeepers.’

Late on Thursday, EU officials agreed on the wording for the Digital Markets Act (DMA), which is one part of a long-awaited overhaul of regulations governing the tech space.

The DMA still needs formal approval, but it essentially seeks to stop big name tech firms such as Apple, Google and Meta from dominating digital markets.

DMA agreement

Last November, Apple warned a blunt warning to European officials over their proposed regulation that will allow for the sideloading of apps.

Apple software senior vice president Craig Federighi said in a speech on Wednesday that allowing iPhone users to install software from the web would open “Pandora’s box” and could pose threats to entire networks of computers.

The European Commission presented the Digital Markets Act (DMA) and Digital Services Act (DSA) in December 2020.

The DSA targets tech platforms that are used “as a vehicle for disseminating illegal content, or selling illegal goods or services online.”

The DMA on the other hand is designed to “addresses the negative consequences arising from certain behaviours by platforms acting as digital ‘gatekeepers’ to the single market.”

The Digital Markets Act could fine big tech firms up to 10 percent of their annual turnover for breaching new EU rules, which require them to open up their platforms to competition from third parties.

In a report filed with the US SEC, Apple specifically named the Digital Markets Act and said that, if enacted, it could require changes to Apple’s App Store that might harm the company’s financial results.

October arrival

The European Commission executive VP Margrethe Vestager welcomed the agreement, and said the new rules should come into force by October 2022.

“It is less than 18 months ago that the Commission tabled the two proposals for the Digital Markets Act and the Digital Service act,” said Vestager. “And here we are today. And with the processes foreseen, these pieces of legislation will would have been voted and published in the Official Journal, so coming into force, sometime in October.”

Margrethe Vestager.  European Commission

“That is really, really fast,” said Vestager. “That means tabling proposal, negotiating positions, negotiating the final text, getting all the way to enforcement in one European Parliament mandate. That is really fast.”

Vestager explained that the EU currently has three competition complaints against Google and is looking at a fourth; on top of two Amazon cases, and it has opened two more Amazon probes; it has three Apple cases; and it has a case against Facebook.

“We have seen what can happen in a market place and we see the changes in the specifics in every case,” said Vestager. “And we share this with the national enforcers within the European Union. They got the complaints coming through their doors as well. We had the Italian case, we had the Dutch case, and we had the German case.”

“For companies that play a role as gatekeepers, now the Digital Markets Act will set the rules of the game,” said Vestager. “This is similar to what has been done a long time ago in sectors such as banking, telecoms, energy, transport where regulation and competition rules work hand in hand. At long last, we establish the same reality here.”

“The DMA will also give us the tools to enforce these obligations,” said Vestager. “Without enforcement, there is no real change on the ground. The possibility to intervene if gatekeepers break the rules, with fines and a wide range of sanctions in case of systematic non-compliance.”

Vestager also pointed that the EU rules includes the possibility of a merger ban.

“I think we have created something with an original architecture that is effective, with more challenging obligations for some of those object to designation and I want to thank you for doing this,” said Vestager.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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