By: Karina Paup Byrnes

On November 1, 2022, the Digital Markets Act (DMA) was passed by the European Union (EU). This legislation aims to comprehensively address antitrust concerns by regulating the digital sector of large tech companies. The DMA represents the new frontier of antitrust legislation, for no prior law has strived to regulate the digital market so thoroughly. The Act’s purpose is to allow for more equitable practices in the marketplace such as greater competition, choice, innovation, and consumer benefits.

The DMA specifically targets six “gatekeeper” organizations, which are the tech companies the EU has identified as being the most influential and impactful on the digital marketplace: Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. With the exception of ByteDance, the Chinese parent company of TikTok, these United States-based companies are now subject to a number of new compliance standards. The response to the regulations has been at best mixed, and companies have expressed concern with the unclear legal landscape of complying with these new laws. The DMA’s large-scale regulatory impact is the first of its kind. While EU regulators are still navigating the DMA’s complex framework, the gatekeepers are scrambling to respond to the DMA and shape the future of a new generation of regulatory antitrust legislation.

The regulation of consumer and user privacy is a core purpose of the DMA. The Act imposes limitations on gatekeeper companies by mandating that personal data can only be acquired with that user’s explicit consent. Such guidelines are designed to provide transparency for collecting, managing, and recording user data. However, what is less clear is how gatekeepers will satisfy this requirement. Gatekeeper companies’ software heavily relies on unrestricted access to user data and the DMA threatens to unravel years of software development. Gatekeepers must now pivot to protect consumer data, rather than rely on collecting unregulated user data to profit.

Additionally, the DMA is intended to equalize the tech marketplace by requiring gatekeepers to open their closed software ecosystems, giving smaller companies access to the software. A closed software ecosystem is when a company has full control over a software system, as opposed to an open ecosystem which is free for anyone to use and has no restrictions on what apps may be installed on it. It is no surprise that Apple has expressed concerns as to how the company will be able to comply without breaching secure information. Apple is pushing back against its status as a “gatekeeper” company, like Samsung successfully did, in an effort to try and curtail the number of DMA regulations it must comply with. In response, the EU Internal Market Commissioner dismissed Apple’s concerns and believes that the DMA can “foster innovation without compromising on security and privacy.” The Commissioner believes that iPhone users should be able to benefit from a wider range of competitive services.

While gatekeepers are unhappy with complying with the DMA, the companies that the Act is intended to support are voicing their frustrations about enforcing gatekeepers’ compliance with the Act. In January 2024, an open letter was penned by a conglomerate of smaller tech companies stating that the six gatekeepers “have either failed to engage in a dialogue with third parties or have presented solutions falling short of compliance with the DMA.” These companies believe that smaller tech competitors and consumers have been ignored, leaving them “in the dark” when it comes to how the gatekeepers are adapting their policies to meet the DMA’s standards. The smaller companies’ statements demonstrate that there is a large concern over whether the EU will strongly enforce compliance, as well as worries that the gatekeepers are not being as forthcoming as they should regarding the changes to their software access and user data protections.

The DMA requires the six gatekeepers to be in full compliance with the Act by March 7, 2024. Only then may there be a true assessment of how these companies have pivoted to conform to the guidelines or what further legal action they may pursue in order to escape compliance. Compelling these companies to take a user-first stance on their software operations could potentially bring great change to how people view their rights as consumers. Additionally, whether the Act increases the competitiveness of the digital marketplace will likely be a development that everyone in the tech industry monitors. Creating a more equitable digital sector could lead to many potential benefits for the consumer. Regardless of the outcome, the successful passage of the DMA shows that there is a strong interest in supervising the growing industry of user data collecting and the power that large tech companies wield.