A New Dawn for Digital Markets: the European Commission’s new Digital Services Package

In a previous post (see here) we discussed that the European Commission (the “Commission”) has launched three consultations on new regulation that would form part of the proposed Digital Services package.

Following these consultations, on 15 December 2020, the European Commission published draft rules that will impact all digital services including social media, online platforms and market places – the Digital Markets Act (“DMA”) and the Digital Services Act (“DSA”).

The DMA proposes new ex-ante regulation of the conduct of digital ‘gatekeepers.’  This aims to create a level playing field for digital business and consumers and to encourage innovative digital services to reach consumers without the threat of large gatekeepers acting as ‘bottlenecks.’

These DMA proposes that a firm will be designated a 'digital gatekeeper' where it

• has a strong economic position, significant impact on the internal market and is active in multiple EU countries
• has a strong intermediation position i.e it links a large user base to a large number of businesses
• has a market position that is stable over time

These are broad criteria that can be expected to catch a number of large tech platforms. Additionally the DMA will also set out quantitative thresholds as a basis to identify ‘gatekeepers’ as well as give the Commission the power to identify gatekeepers following a market investigation.

Under the DMA, businesses that qualify as ‘gatekeepers’ will have to comply with new obligations and rules of conduct in their daily operations – this includes restrictions on :

•  treating their own products and services more favourably (e.g. in terms of ranking) than competing third party services or products offered on the gatekeeper's platform
• preventing interoperability; and
• preventing users from un-installing any pre-installed software or app.

It will also require certain proactive measures from gatekeepers (e.g. to facilitate data access for users).

The DMA also gives the Commission the power to carry out targeted investigations to determine whether new practices should be added to the gatekeeper rules to ensure the rules keep pace with market developments.  

The second arm of the Digital Service Package- the DSA will introduce new EU rules that will regulate content on digital platforms such as excluding illegal goods online as well as safe guarding users whose content may be deleted.

 The DSA and DMA are pending approval by the European Parliament and Member States before coming into force across the EU.