The Digital Markets Act (DMA) marks a revolution in competition law, with the power to transform how the world's biggest players behave online.
Its full impact will not be felt immediately, but already starting Thursday six so-called "gatekeepers" will face tougher curbs: Google parent Alphabet, Amazon, Apple, TikTok owner ByteDance, Meta and Microsoft.
Drawing the lessons from years of drawn-out legal cases trying -- often in vain -- to end anti-competitive practices by tech titans, the EU seems to have finally equipped itself with the powers to bring companies to heel.
The DMA has a list of do's and don'ts for businesses to ensure there is a level playing field. For example, providing users with more choice when they choose a web browser on their devices instead of forcing a default option.
Google, for example, will be banned from favouring its own platforms, like Google Shopping, in search engine results.
Meanwhile, Apple must allow iPhone users the ability to download alternative application stores to its own App Store, and likewise for payment systems competing with Apple Pay.
"Given the speed at which these markets evolve and given how long classic competition procedures take, it was necessary to have the ability to intervene earlier, instead of coming after the damage had been done," said Romain Rard, a lawyer at Gide law firm in Brussels.
- Apple's 'mockery' -
The six tech titans have announced a raft of changes since they were targeted by the commission, the EU's powerful anti-trust regulator, in September -- giving them time to prepare.
But for Rard, it's too soon to draw any conclusions.
"Is this minimum compliance without any real change in the companies' behaviour, and if this is the case, how far will the commission be prepared to go in applying the DMA and its highest sanctions?" he asked.
On Friday, 34 digital companies and organisations called on the commission to crack down on Apple -- saying its planned changes to comply with the DMA "make a mockery" of the law.
What is certain is that the new law gives the EU stronger tools to ensure enforcement.
Currently violations of competition law can see companies slapped with fines of up to 10 percent of global turnover. This can rise up to 20 percent for repeat offenders under the DMA.
- Bolstered powers -
The EU's past experiences have shaped the new rules.
Since 2017, Google has been hit with fines totalling around eight billion euros ($8.7 billion) by the EU, without resolving the abuses linked to the all-powerful search engine.
Critics say even such colossal fines are pocket change for the biggest tech companies -- considering that Google's profits reach around 20 billion euros per quarter.
Those concerns are why the commission has given itself the power to dismantle offenders, forcing them, if necessary, to sell part of their business.
Some describe this as akin to an "atomic bomb". But would the EU dare to use it?
"We have been discussing for months with companies to make clear that the rules of the game have changed. Any company which will be found not to be compliant will face strong sanctions," the EU's internal market commissioner, Thierry Breton, told AFP.
The commission will now study the compliance plans by each company, and continue speaking to the giants and third party organisations concerned.
The DMA will allow the EU to act more quickly by simplifying the burden of proof for the 100 or so experts responsible for applying the rules at the commission.
For example, under previous legislation, the commission launched proceedings against Google in 2010 but it was not until 2017 that it was able to hit the US giant with a fine of 2.4 billion euros.
After several appeals, Brussels is still awaiting a final ruling from the EU courts.
Under the DMA, the commission has 12 months to reach a decision after opening a proceeding against a company. To avoid the suffocating tactics of lawyers who flood the regulator with hundreds of pages, there will be a limit of 50 pages for documents.
"This is an important step that will enable progress," said Andrea Collart, an antitrust specialist for the Forward Global firm.
"The DMA attempts to respond in a concrete way to the needs of competitors who today cannot compete with the digital giants," he added.
Five things to know about the EU's landmark digital act
Brussels, Belgium (AFP) March 5, 2024 -
The world's biggest digital companies will be forced to comply from Thursday with strict EU rules that Brussels hopes will make the online market fairer for all.
The European Union in September named six so-called gatekeepers and 22 of their platforms including Facebook, Instagram and LinkedIn that must adhere to the rules: Google's Alphabet, Amazon, Apple, TikTok parent ByteDance, Meta and Microsoft.
That list is expected to grow after online travel agent Booking and Elon Musk's X notified the European Commission last week that they met the criteria to be considered gatekeepers.
Here are five rules included in the law that will force the titans to change their ways.
- Save the start-ups -
Big tech companies make billions of dollars in profit every year and some of the windfall goes to scooping up start-ups and innovators.
This rankles authorities, who accuse the giants of using their war chests to snuff out potential rivals before they become a threat.
Under the new rules all buyouts, no matter how small, will have to be notified to the commission, the EU's executive arm based in Brussels.
The commission also acts as the EU's powerful competition regulator.
- Messaging unity -
After multiple scandals that hit Meta-owned Facebook, many users chose to swap the giant's Messenger or WhatsApp messaging services for alternatives, such as Signal or Telegram.
Yet the market power of Meta's services remains strong, making it difficult for WhatsApp dissenters to keep messaging links with family and friends.
To solve this, the DMA imposes interoperability between messaging apps, all while demanding that communications remain encrypted from user to user.
- Fair shopping on Amazon -
Amazon is a major shopping platform for thousands of companies to sell their wares online. But suspicions are rife that the online giant abuses its role as a marketplace to better position its own products as a retailer.
The DMA will ban this conflict of interest, as well as demand that the gatekeepers share key information with business customers.
- Open the App Store -
Around the world, Apple has defended the sanctity of its App Store, barring companies from using their own payment systems or for apps to be downloaded outside the Apple store.
Despite its warnings that opening up iPhones would pose a security threat, the DMA will force Apple to give ground on both those fronts.
Apple has said it will comply, but app developers and some digital companies, including Swedish music streaming giant Spotify, have accused it of acting in bad faith with changes that create prohibitive new costs for rivals.
Failure to comply with the DMA could carry fines in the billions of dollars -- big enough even for the world's biggest company by market value to pay attention.
Repeat offenders would see fines of 20 percent of their global turnover.
Any gatekeeper platform that locks in customers to use pre-installed services, such as a web browser, mapping or weather information, will also face fines.
- Ad transparency -
Google's search engine and Meta's Facebook and Instagram are the world's biggest online advertisers, a status that critics say the companies abuse by accumulating valuable data about customers and keeping it to themselves.
The DMA will force the tech giants to reveal much more to advertisers and publishers on how their ads work and on an ad's actual effectiveness.
This will make companies less beholden to Google or Facebook for understanding their customers and potentially encourage firms to get their message out in new ways.
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