The Good, the Bad (and Sometimes the Ugly) Digital Markets Law Amendments: Part 4
The EU is at a crucial time in determining the direction of the Digital Markets Act (DMA), legislation that could radically transform the way Europeans experience services like Google, Amazon, Apple and Facebook.
A number of European Parliament committees have examined the draft proposal and corrected it. The main Committee on the Internal Market and Consumer Protection (IMCO) of the European Parliament published its amendments, while the associated committees for economic and monetary affairs (ECON) and for industry, research and energy (ITRE) have contributed theirs in opinions. The committees for culture and education (CULT) and transport and tourism (TRAN) have also produced reviews which will have to be examined by the IMCO committee.
Given the far-reaching changes that the DMA will impose, the Committees on Legal Affairs (JURI) and Civil Liberties, Justice and Home Affairs (LIBE) also have a role to play. Like the others, they also proposed amendments, some good, some bad, and some even ugly. How do they help or hinder the purpose of DMA adapted to the digital age? Let’s see.
Legal Affairs Committee
Amendment 394 would require the Commission to publish guidance on its interpretation of the obligations contained in Articles 5 and 6. This can be an important source of legal certainty which will encourage investment in future products and services in Europe. The regulation of basic platform services which is at the heart of DMA, in Articles 5 and 6, involves a lot of new and untested hypotheses. These rules are the result of a series of competition cases, but will be applied outside their original context, to completely different products and services. What does a “self-preference” remedy from a research case mean, if applied to cloud services? What does the use of unbundling mean when it is applied to integrated products? Guidance is needed to answer these questions, whether formally or informally.
DMA is a far-reaching regulation of platform services, imposing rules on the technical design of products and services and contractual relationships with business users. The impact of all these changes on the digital economy are not well understood, as identified by the Commission itself Regulatory Review Board. This step into the unknown, however, does not prevent some decision-makers from being even more ambitious. Various changes would bring new services within the scope of DMA, including vehicle software (Amendment 176), connected televisions (Amendment 181), web browsers (Amendments 17, 172, 177, 178, 179), “Digital work platforms” (Amendment 18) and virtual assistants (Amendments 19, 180).
The range of services covered by the DMA is already quite wide, despite its alleged focus on areas where there are structural competition problems and well-established evidence of anti-competitive behavior. Reaching even further than the evidence base, especially with respect to new and emerging services, risks reducing the very competition that DMA is supposed to encourage. Decisions will have to be based on further speculation about the future development of the market, putting the Commission in the unfortunate position of having to choose the winners and losers of the market, and leaving European citizens and business users to face the unintended consequences that this type of centralized decision-making entails.
The ugly one
Article 12 of the DMA already imposes an extended notification obligation on designated controllers, requiring them to inform the authorities of any “concentration” or acquisition in the digital sector, regardless of its size or location. Considering this information will already occupy considerable time for the approximately 80 officials currently scheduled. But under Amendment 323 this obligation becomes practically unmanageable: the designated inspectors should inform the authorities of all acquisition, without qualification. If a designated caretaker acquires, say, a co-working space for remote workers or purchases an ice cream shop to provide better treats for their employees, that would all require notification. Woe to the unfortunate administrators charged with reviewing these obviously irrelevant acquisitions.
Committee on Civil Liberties, Justice and Home Affairs
One of the main concerns of the DMA is the risk of over-application, that regulators and authorities interpret the provisions so strictly that the Valuable benefits created by the platform’s business models will be lost. One of the ways to solve this problem is through regulatory dialogue, as provided for in the DMA recitals, and claimed by many industry associations. Technical experts and engineers should work with regulators to explain the trade-offs inherent in different product design choices (e.g. something that is good for business users, e.g. unhindered data sharing, can be problematic for consumers). Amendment 171 would help ensure that the Commission engages in this dialogue, to achieve the desired results in the market, rather than leaving companies in the dark about what is expected of them.
Public morals are one of the few reasons that designated custodians can request the suspension or modification of DMA obligations. So, in theory, designated custodians will be allowed to remove content and potentially ban the most harmful users from their services. This is a fairly limited exception and should be extended to allow “gatekeepers” to take the necessary measures to protect consumers on their services. Amendments 64 and 176 However, would go in the opposite direction, removing the public morality exception and turning the guards into sliding doors when it comes to discrimination, misogyny, homophobia or worse.
The ugly one
The DMA assumes that EU competition enforcement has identified several harmful business practices of a handful of companies that should be addressed through ex ante regulation instead of case-by-case competition enforcement (with associated rights of defense). While it removes the need for market definition or competitive assessment, it still gives companies the opportunity to defend themselves by arguing that they are not, in reality, gatekeepers or bottlenecks in a market, that is, there are competitive alternatives. Amendments 93, 104 and 105, would remove this possibility, forcing all companies that reach a certain size to fulfill intrusive obligations, regardless of market realities. Even in the absence of any possibility of harm in their specific markets, companies beyond a certain size would have to modify their technical infrastructure and relationships with business users in order to comply. As the digital economy grows, more and more businesses would get caught. This ‘big is bad’ presumption would send a clear signal to all digital businesses on how success should be rewarded by European regulators. Not exactly the kind of message that will help prepare Europe for the digital age.