Digital Markets Act: European Union Adopts New "Competition" Regulations for Certain Digital Platforms
The European Parliament ("EP") and Council formally adopted the Digital Markets Act ("DMA") in July 2022, imposing new behavioral obligations on large digital platforms qualifying as "gatekeepers." The final agreement introduces several changes compared to the initial proposal detailed in our January 2021 Commentary, the most significant of which are: increase in the thresholds that qualify a business as a gatekeeper; the addition of web browsers and virtual assistants to the list of core platform services; additional behavioral obligations, including an interoperability requirement for messaging services; and new sanctions for systematic violations such as a temporary ban on a gatekeepers mergers and acquisitions.
The European Commission ("EC") initially proposed the DMA in December 2020 with the stated goal of promoting fair and contestable markets in the digital sector. The DMA is an unprecedented shift in the European Union's oversight of large digital platforms. Historically, the EC observed a "law enforcement" approach when addressing the conduct of digital platforms, investigating and sanctioning conduct only when it believed a practice violated EC competition law. The DMA, however, is a more regulatory approach that eliminates the EC's burden to analyze and prove market definition, market power, and efficiencies.
