On November 1, 2022, the EU Digital Markets Act (DMA) entered into force. It is a landmark piece of legislation that – together with its sister regulation Digital Services Act (DSA) – will determine how large online platforms operate in the decades to come to ensure fair competition and more choice for users. DMA will target “gatekeepers”, i.e., corporate groups which have a significant impact on the internal market, serve as an important gateway for business users, and enjoy (or will enjoy) an entrenched and durable position – all of which is presumed if the group exceeds certain monetary and user-base thresholds. Unlike ex post competition law, DMA is often considered an ex ante instrument which aims at fixing digital markets even before any harm is done. Below we briefly discuss the DMA’s timeline, potential gatekeepers’ early implementation efforts, and long-term outlook.

The timeline

At the heart of the DMA are 20 or so dos and don’ts, many of which are inspired by European Commission’s past and current antitrust cases against big platforms. The DMA also includes extensive reporting obligations, such as an obligation to report all digital sector-related and data-related M&A transactions and to prepare annual reports on consumer profiling.

However, it will take a while before these obligations are legally enforceable. Some (notably, the obligation to report all digital sector-related and data-related M&A transactions) will kick-in immediately after a given company is designated as a gatekeeper, but the first companies will be designated only around August / September 2023. The core dos and don’ts will apply only six months after designation.  The DMA will thus become fully applicable only around February / March 2024 – unless a given platform presents well-substantiated arguments that it should not be designated, in which case the DMA may apply to that platform only months later (or not at all).

The graph presents the timeline of Digital Markets Act Application, starting from October 12, 2022 when was DMA published in the Official Journal. The next steps: November 1, 2022 - DMA entered into force; May 2, 2023 - DMA starts to apply; June/July 2023 - potential gatekeepers notify the Commission; August/September 2023 - first gatekeepers designated (general obligations applied); February/March 2023 - DMA fully applicable (dos and don’ts applied).

Over the next few months, the Commission will hold a series of workshops to gather insights from market participants on the implementation of the obligations enshrined in the DMA. The first workshop was held on December 5 and focused on the self-preferencing ban. There was an intense debate on how Google should implement the ban, and in particular how it should change the search results page, especially the so-called OneBox. The company has a daunting task ahead, as it must try to reconcile the (sometimes conflicting) expectations of many groups, i.e. traders, consumers and competing vertical search engines. Similar problems are likely to occur in the implementation of many other DMA obligations. The Commission will also soon launch a public consultation on the DMA’s implementing regulation, which will clarify certain procedural issues. 

The DMA’s timeline will largely overlap with that of the DSA, which has also just entered into force and will also become fully applicable around the beginning of 2024. The DSA is focused on fighting illegal online content and is sometimes referred to as the “content moderation law”. It has a much broader scope, covering almost all online intermediaries, from network operators, to hosting providers, to online platforms and search engines. In terms of compliance efforts, 2023 and 2024 will thus be very challenging, especially for large platforms.

Early implementation

Interestingly, some potential gatekeepers have already started adjusting their businesses along the lines of the DMA’s new obligations. For example, Google recently announced that it will allow some European developers to use alternative payment systems and explicitly called it an early effort to comply with the DMA. The implementation of upcoming regulations in advance is rather unusual, however - if being appointed a gatekeeper is highly likely, then a proactive approach to the DMA seems to be a good idea. In particular, it allows companies to test the reaction of users and competitors to new developments – and that reaction will no doubt have a significant impact on the European Commission's assessment.

A pre-emptive DMA implementation can also sometimes help avoid pending or potential antitrust proceedings, thus killing two birds with one stone. For example, Amazon recently committed to changing the way data is gathered on its online marketplace – to put an end to an EU antitrust probe, but also “mindful” of its obligations under the DMA.

Some fear that early implementation of the DMA will allow gatekeepers to prejudge future DMA interpretation.  Indeed, if something is good enough to put to rest an abuse of dominance case, one may expect that it should also address DMA-related concerns – especially as both regimes seem to pursue very similar goals (even if they use different labels).  However, whether this is good or bad is an entirely different question – after all, early DMA implementation allows for faster application of potentially beneficial solutions.  In addition, the Commission makes it clear that any concessions will be re-evaluated after the DMA comes into effect.

Long-term outlook

The DMA’s direct impact on big platforms’ business models, especially in the short term, not yet clear. However, we can make some assumptions about the long-term effects. 

First, the DMA may result in the adoption of "platform laws" in other jurisdictions. We are already seeing examples of similar legislation in Germany and South Korea. The UK and Australia are also working on their own solutions. Each of these tools has its own specifics. For example, the British and Australian regulations are likely to be based on general principles, which will be detailed in the form of "codes of conduct" tailored for a specific platform. The German provisions, on the other hand, are part of the Competition Act and set out a general list of potential prohibitions, which can be further elaborated or interpreted in the Bundeskartellamt’s decisions against companies which are of paramount significance for competition across markets. All of them, however, target large digital platforms with the aim of protecting competition (or, as the DMA puts it, "contestability").

Second, even if no "platform law" emerges in a jurisdiction, the DMA can inspire antitrust cases against platforms that do not have gatekeeper status but have a dominant position. History shows that laws prohibiting abuse of dominance can be very capacious.

Third, outlawing certain strategies aimed at reducing "contestability" may prompt platforms to seek other strategies to make their products difficult to contest. European Commission officials suggest that in such a situation, the DMA will be supplemented by classic competition law, i.e. abuse of dominance proceedings will be initiated. At the same time, antitrust prosecution of such new practices can be expected to inspire successive iterations of the DMA and similar regulations.

The DMA may thus become the beginning of a feedback loop that will slowly but steadily increase competition (a.k.a. “contestability”) in the entire digital sector. On the other hand, due to the sector’s enormous heterogeneity and the prevalence of network effects (which, by their very nature, reduce contestability), it is difficult to say when and to what extent that result will be achieved.

The graph shows the effect of DMA - DMA will prompt companies to adopt new business strategies, new strategies will result in new antitrust cases, and new antitrust cases may be addressed in new versions of DMA or in local "platform laws."