If you are interested in the digital market, it is important to know the decision of the Parliament and the European Commission regarding the DMA (the Digital Marketing Act). It could well upset the current organization of digital platforms in Europe. Are you wondering what changes this new law will bring to digital markets? Here is the complete point to understand everything about the Digital Marketing Act.
What is DMA?
the Digital Marketing Act (DMA) is a draft law at European level governing digital markets, currently under discussion in the European Parliament. This legislation would give small businesses and users more room to operate on the Internet.
To do so, the DMA intends impose a regulatory framework on many sectors of digital marketsin particular to web giants in a monopoly situation (mainly Google, Facebook, Apple or even Microsoft and Amazon).
The Digital Marketing Act aims above all to prevent “certain harmful commercial practices of very large digital players” and to create “a fairer economic space” in order to “unlock digital markets, strengthen the freedom of choice of consumers” according to the words by Cedric O, State Secretary for Digital Transition and electronic communications in France.
It was in December 2020 that the first piece of legislation was presented. This project was renewed in November 2021 with the proposal of a provisional text. Nevertheless, it will have been necessary wait almost more than a year and a half after its first presentation for a provisional text to be finally ratified jointly by the European Commission and the Parliament, on March 20, 2022.
In fact, it is the large platforms mixing a large number of users who are in the sights of the DMA, qualified as “access controllers”. On the other hand, users, customers, Internet users and professionals are the big winners.
The purpose of this text is to ensure that these major players do notimpose more unfavorable conditions on more discreet actors and users. The Digital Marketing Act then intends to make room and open the market to new companies by preventing the web giants from abusing their power and position.
The DMA wishes to regulate the digital market and the platforms generating large revenues. In the text of the law, we then find many obligations that digital companies will have to comply with if they want to continue to exist on the European market.
The text provides for a list of criteria governing the platforms concerned, qualified as “access controllers”. For a platform to fall into this category, it must:
- achieve a turnover of 7.5 billion euros per year in the territory of the European Union or have a market valuation of the same amount;
- have at least 45 million end users all less;
- welcome 10,000 business users established in the European Union;
- be responsible for at least a service in three Member States of the European Union.
By “service”, the European Parliament means in particular application stores, web browsers and search engines, online cloud services and social networks. New proof that this law is primarily aimed at the Gafam:SMEs will not be affected.
Here are the main measures and obligations to which access controllers will have to comply as soon as this European law comes into force:
- allow users to unsubscribe from the services offered under the same conditions as the subscription,
- not pre-install some software or impose their default software when installing the operating system,
- allow interoperability of their applications and instant messaging systems (allowing other messaging services to connect to their basic functionality),
- allow sellers to access all of their marketing performance statistics and advertising, forcing players to operate a strategy of total transparency,
- on their platforms, no longer promote their services and products compared to those offered by other companies (in particular Amazon, which practices self-preference on its online sales platform),
- allow developers and third-party companies to access all smartphone featuresin particular payment by NFC chip.
The European law provides for record fines for failure to comply with these obligations, ranging from 10 to 20% of the worldwide turnover of the companies concerned. Finally, in the event of repeat offences, the European Commission reserves the right to open a market investigation and impose heavy penalties and restrictive measures on the platforms.
Among all the changes that DMA brings, it is in the world of payments on the Net that some of the main upheavals are expected to occur. This is the manufacturer Apple which is particularly targeted. The firm indeed prevents payment applications and external developers from having access to its Near Field Communication (NFC) chip on its smartphones, favoring its own payment system, ApplePay.
This feature allows you to pay with NFC using your smartphone in the same way as a payment card in many physical stores. The new European legislation on digital markets would then make Apple’s practice illegalallowing the arrival on the iOS interface of new players, in particular the French firm PayLib.