Introduction to the Law
After a fast-paced legislative sprint, the European Union Parliament, Council, and Commission have provisionally agreed to the terms of the Digital Markets Act (“DMA”). [1]
Once finalized, DMA will seek to regulate “gatekeepers” that provide “core platform functions” such as web browsers, messengers, and social media.[2] DMA will only apply to some of the largest global companies – such as Amazon, Apple, Google, Meta, and Microsoft – that have market capitalization of 75 billion euro or annual revenue of 7.5 billion euro, and 45 million annual end users in the European Union.[3] The regulation intends to prohibit anticompetitive behavior and to protect consumers’ data privacy. Gatekeepers that offer wide, interlocking environments of services will no longer be permitted to combine personal data for the purpose of targeted advertising without the explicit consent of the user.[4] Additionally, certain gatekeepers will be obligated to enhance their platforms’ interoperability to eliminate barriers to entry for smaller competitors and new entrants.[5] For example, Apple may be forced to allow for alternatives to its App Store on Apple devices, and WhatsApp may have to open up its platform to allow users of rival services like Signal or Telegram to send and receive messages through WhatsApp.[6] Penalties may range from 10-20% of a company’s global annual revenue to outright bans on making acquisitions, depending on whether infringements are repetitive and systematic.[7]
Diversity of Opinion
Proponents of DMA tout the law as a necessary reaction to Big Tech’s meteoric rise in value and influence over the past decade. However, some U.S. officials worry that DMA may go too far. In a recent letter, a bipartisan group of thirty lawmakers stated that they “are greatly concerned that E.U.’s proposed approach to promoting competition among digital platforms unfairly targets American workers by deeming certain U.S. technology companies as ‘gatekeepers’ based on deliberately discriminatory and subjective thresholds.”[8] The group also lamented that DMA may not target large Chinese firms like Alibaba, Baidu, or Tencent.[9] Despite this appeal, the Biden Administration has stated that the U.S. “shares the concerns and policy objectives that the E.U. seeks to address,” though it has concerns about distinct elements of the E.U.’s approach.[10]
Recent Antitrust Cases Against Big Tech
DMA is a major legislative leap forward in Europe’s efforts to rein in Big Tech, but institutions in the United States and European Union have been litigating to enjoin key players’ anticompetitive practices for years. In October 2020, the Department of Justice filed suit against Google alleging that it unlawfully attempted to protect its monopoly over search and search advertising by leveraging exclusive deals with Apple, mobile carriers, and other hardware manufacturers to make Google the default search engine on many devices.[11] Later that year, the Federal Trade Commission (FTC) filed suit against Facebook (now Meta) for its strategic acquisitions of Instagram and WhatsApp years earlier. The FTC argued that Facebook did so to unlawfully reduce future competition in the social media and messaging markets.[12] In May 2021, the District of Columbia sued Amazon for leveraging its monopoly power to force third-party sellers into most-favored-nation agreements that increased market prices by forcing sellers to consider Amazon’s weighty fee structure when setting suggested retail pricing for the rest of the online market.[13] The European Commission has also leaned in to antitrust enforcement, as its competition subdivision is litigating seven ongoing cases against Apple, Amazon, Facebook, and Google as of February 2022.[14]
Moving Forward: The Brussels Effect and Potential U.S. Legislation
The effects of DMA will certainly be felt outside of Europe’s borders. In her article, The Brussels Effect, Anu Bradford theorizes that the E.U. is uniquely positioned to export its legal institutions and standards to the rest of the world, even without cooperation from other countries or international institutions.[15] This is due to the E.U.’s large domestic market and advanced regulatory infrastructure.[16] Foreign companies that wish to do business in the E.U. must adjust their practices to abide by E.U. standards, which are often among the most stringent in consumer markets, or else forego the market altogether.[17] Further, companies that choose to acquiesce to E.U. standards are incentivized to standardize their global practices to abide by a single rule for the sake of efficiency.[18] Hence, the E.U. standard becomes a de facto global standard.[19]
Europe has already established itself as Big Tech’s preeminent global regulator, but American lawmakers may soon begin to follow suit. The Senate Judiciary Committee recently approved two bills targeting specific anticompetitive practices. The Open App Markets Act[20] seeks to empower app developers to reach their customers without using Google Play or the Apple App Store, and notably, without paying the fees associated with these services.[21] Additionally, the American Innovation and Choice Online Act seeks to prohibit large online platforms like Amazon from giving preference to their own products on the platform and unfairly limiting availability on the platform for competing products from other businesses.[22] Whether Congress possesses an appetite to pass these bills, let alone a more wide-ranging regulation of Big Tech, remains to be seen.
[1] Press Release, European Parliament, Deal on Digital Markets Act: EU Rules to Ensure Fair Competition And More Choice for Users (Mar. 24, 2022).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] See Adam Satariano, E.U. Takes Aim at Big Tech’s Power With Landmark Digital Act, N.Y. Times (Mar. 24, 2022), https://www.nytimes.com/2022/03/24/technology/eu-regulation-apple-meta-google.html.
[7] See Press Release, European Parliament, supra note 1.
[8] Lauren Feiner, Bipartisan Lawmakers Want Biden to Tell Europe to Stop ‘Unfairly’ Targeting U.S. Tech Companies, CNBC (Feb. 23, 2022), https://www.cnbc.com/2022/02/23/lawmakers-ask-biden-to-tell-eu-to-stop-unfairly-targeting-us-tech-companies.html.
[9] Id.
[10] Leah Nylen & Adam Cancryn, White House Backs U.S. Tech Antitrust Bills, Politico Pro (Feb. 2, 2022), https://subscriber.politicopro.com/article/2022/02/white-house-backs-tech-antitrust-bills-00005513.
[11] Complaint at 3-4, U.S. v. Google LLC, No. 1:20-cv-03010 (D.D.C. filed Oct. 20, 2020) (available at https://www.justice.gov/atr/case-document/file/1329131/download); see also Cecilia Kang et al., U.S. Accuses Google of Illegally Protecting Monopoly, N.Y. Times (Oct. 20, 2020), https://www.nytimes.com/2020/10/20/technology/google-antitrust.html.
[12] Complaint at 2, Fed. Trade Comm’n v. Facebook, Inc., No. CV 20-3590, 2021 WL 2643627 (D.D.C. June 28, 2021) (available at https://www.ftc.gov/system/files/documents/cases/051_2021.01.21_revised_partially_redacted_complaint.pdf).
[13] Complaint at 2, D.C. v. Amazon.com, Inc., No. 2021-CA-001775-B (D.C. Super. Ct. filed May 25, 2021) (available at https://oag.dc.gov/sites/default/files/2021-05/Amazon-Complaint-.pdf).
[14] Simon van Dorpe, EU Ramps Up Big Tech Clampdown Without 3 Top Antitrust Investigators, Politico (Feb. 17, 2022), https://www.politico.eu/article/eu-ramps-up-big-tech-clampdown-without-three-top-antitrust-investigators/.
[15] Anu Bradford, The Brussels Effect, 107 NW. U. L. REV. 1, 1 (2012).
[16] Id. at 6.
[17] Id.
[18] Id. at 7.
[19] Id.
[20] See Open App Markets Act, S. 2710, 117th Cong. (2021).
[21] Mark MacCarthy, The Open App Markets Bill Moves Out of the Senate Judiciary Committee, Brookings (Mar. 10, 2022), https://www.brookings.edu/blog/techtank/2022/03/10/the-open-app-markets-bill-moves-out-of-the-senate-judiciary-committee.
[22] See American Innovation and Choice Online Act, S. 2992, 117th Cong. (2021).
