The second phase of Europe’s tech crackdown is finalised

It looks like the EU has agreed on the final text for the Digital Markets Act, which is designed as an exercise in regulatory catch-up with US big tech firms.

The preliminary version of the DMA was unveiled a few weeks ago, positioned as an attempted to rein-in the power of perceived digital ‘gatekeepers’, the likes of Google and Facebook, who control much of the way the rest of us interact with the digital economy. It has been developed in parallel with the Digital Services Act, which seems to be little more than a power grab over what takes place in the digital domain, especially speech.

We haven’t seen a formal announcement from the European Commission or any of its rubber-stamping subsidiaries but scourge of the tech giants, Commission EVP Margrethe Vestager, seemed to have signaled the DMA was done and dusted in a recent speech.

“We reached the political agreement on the DMA just a few weeks ago,” said Vestager. “The architecture of the DMA is designed around central enforcement at EU level, with designated gatekeepers subject to certain do’s and don’ts. This makes sense, because we are dealing with only a limited number of companies, which are by definition active on a European scale.  The DMA will enter into force next spring and we are getting ready for enforcement as soon as the first notifications come in.

Law firm Linklaters got in touch with some expert commentary. “Not all amendments that dominated the debates over the last months have made it into the final text of the DMA,” said William Leslie, Counsel in the Antitrust & Foreign Investment Practice.

“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.”

“The DMA has sailed through the legislative process at record speed,” said Bernd Meyring, Partner in the same practice. “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.”

Not having been inclined to read the whole tome, it’s hard to analyse precisely what effect the DMA will have on these digital gatekeepers. But at the very least it marks a symbolic ratcheting up of regulatory pressure on big tech by one of the world’s biggest power centres.

While gratuitous bureaucracy is bad, there does seem to be a clear need for these dominant and democratically unaccountable companies to be constrained to some extent and for the greater societal need to be play a bigger role in their overall strategies. The EU, US and UK all seem agreed on this, so expect several years of regulatory cat-and-mouse as the public sector seeks to reclaim some of the power it lost to the private sector over the past decade, while the former was asleep at the wheel.