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Navigating The Complexity of Ownership From The Lens of Sanction By Extension

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Digital Markets Act

12 March, 2024

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The Digital Market Act is the EU’s first law to regulate “gatekeepers.” Gatekeepers are digital media platforms providing online apps, search engines, messenger services, etc. Six businesses were named gatekeepers according to the European Group in September 2023: Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. These gatekeepers hold one core digital service from the various online platforms. To safeguard from illicit activities, they must comply with the latest DMA regulation according to updated requirements before March 2024.

Background on the Digital Market Act 

The European Commission proposed the Digital Market Act and Digital Service Act in December 2020 to combat growing scams in online services. DMA aims to create a secure environment for businesses and consumers. The DMA came into effect on November 1, 2022. Companies offering critical platform services must notify the Commission and submit all pertinent information within two months of that date, assuming they satisfy the quantitative requirements.

In April 2023, the Commission disclosed the very large online platforms (VLOPs) and two very large online search engines (VLOEs). The VLOPs included Google Maps, Google Play, Facebook and Instagram, LinkedIn, TikTok, YouTube, and Zalando.  Moreover, Bing and Google were added to the VLOEs. They stressed that these platforms have 45 million active users, so they must comply with DMA in five months. The commission extended this date in September 2023 till March 2024. 

Core Understanding of DMA 

When it comes to regulating online money-making machines, including Google, Meta, and Amazon, the EU’s Commission constantly upgrades its obligation to protect the integrity of the global economy. The DMA is implemented along with the EU’s Competition Laws and General Data Protection Regulation (GDPR) to mitigate the power of digital platforms and supervise their activities. The Commission also imposed the Fines for noncompliance with the DMA might equal 10% of a company’s yearly revenue.

 

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Obligations for Companies Under DMA 

Interoperability- the first requirement is compatibility with the third-party sellers in the online platforms. Communications with third-party service providers to provide the same level of opportunity for competition. This will assist the government in monitoring if they are preventing small businesses from selling on their platforms and providing the same service as their competition. They also don’t have the right to surpass their competitor’s service by offering the same product and service as the competition. 

Data Protection- Customer confidential information breaches are a significant global threat. EU obliges gatekeepers to secure the consumers’ data in high-bolstered cloud-based databases. The Gatekeeper is prohibited from processing end users’ data obtained through third-party services that utilize the Gatekeeper’s core platform features to offer online advertising services.

Transparency – under DMA, online platforms must inform users about the data they store and share for advertising. Consumers should decide which information they want to disclose or what they do not, including the notification enable. The companies require transparency about the purpose, duration, and impact of consumer profiling. In addition, gatekeepers have to make sure that every attempt is taken to get consent from users and give them the ability to revoke or refuse consent for the gathering and utilizing their data.

What Gatekeepers Can Do or Dont’s 

Do’s for Gatekeepers 

  • Allow third-party service providers to share similar services in certain specific situations on their platforms
  • Allow users to access the data they are storing in the database by using their platforms
  • Give access to other companies for advertising on their platform and can conclude the contracts with the customers outsource of gatekeepers platforms

Dont’s for Gatekeepers

  • They dont rank themselves on the top in the platform if the competitors are providing the same services or products
  • Preventing the customers from dealing with third-party outside the platforms
  • Prohibiting customer from un-installed their platform and installing other software
  • Track the user activity in another platform for direct targeted advertising

Implementation Challenges with DMA 

The gatekeepers comply with rigid regulations, including AML, KYB, and GDPR. Now, DMA EU’s latest regulations raise the bar and cost for online service providers to combat cybercrimes. DMA compliance is not cost-efficient; It will expose companies to significant challenges in the future. In order to comply with DMA compliance standards, it will probably be necessary to make adjustments to data collecting and processing procedures, upgrade equipment, and take other steps. Regulators will be crucial in enforcing the rules and ensuring gatekeepers follow them rather than merely regarding data sharing obligations and other measures.

Sectors which cover in DMA 

Eight online core platform sectors must comply with the DMA in March 2024. Below are the gatekeepers from the European Commission: 

  • online search engines ( Google Search/Bing)
  • online intermediation services  (Google Play Store, Apple’s App Store)
  • social networks (Facebook/Instagram/Tiktok)
  • video sharing platforms (YouTube)
  • communication platforms (WhatsApp, Gmail, Messenger)
  • advertising services (Google Ads/Meta Business)
  • operating systems (Android/ iOS)
  • cloud services (Amazon Web Services)

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