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Proposed rules aim to curb the monopolising power of tech giants in Europe, which may include halting ‘killer acquisitions’.
An EU committee has voted in favour of the Digital Markets Act (DMA), which, along with the Digital Services Act (DSA) aims to rein in the monopoly large multinationals hold in Europe’s digital space.
The details of the DMA have been hammered out in recent months, leading to clashes between EU lawmakers and large tech firms.
The draft law approved by the European Parliament’s internal markets committee this week blacklists certain practices by large ‘gatekeeper’ tech companies that wield a disproportionate amount of power in their markets.
It defines these as major companies with €8bn in annual turnover in the European Economic Area and a market capitalisation of €80bn.
To qualify as a gatekeeper, companies also have to provide a service in at least three EU countries and have 45m monthly service users operating in areas such as online intermediation services, social networks, search engines, operating systems, online advertising services, cloud computing and video-sharing services.
Under the DMA, these gatekeepers will have to follow certain requirements on the use of data and must refrain from combining personal data for the purpose of delivering targeted or micro-targeted advertising for its own commercial purposes and the placement of third-party advertising on its own service.
Children’s personal data will also not be allowed to be processed for commercial purposes, such as direct marketing, profiling and behaviourally targeted advertising.
‘Killer acquisitions’
MEPs also agreed this week to empower the European Commission to impose “structural or behavioural remedies” in cases of systemic non-compliance. These remedies may include restricting or temporarily halting so-called ‘killer acquisitions’.
Recent deals probed in the EU include Google’s acquisition of Fitbit and Facebook’s takeover of Kustomer, among a host of other antirust cases.
Major tech acquisitions are often seen as threats to the market, potentially increasing companies’ monopolising power. The approved DMA text allows for the possibility to stop gatekeepers from making acquisitions in areas relevant to the DMA in order to prevent further damage to the internal market.
Gatekeeper companies would also be obliged to inform the European Commission of any intended concentration.
Zdravko Počivalšek, Slovenia’s minister of economic development and technology, said he is proud that EU leaders have agreed on a commitment to ensure fair competition online.
“The proposed DMA shows our willingness and ambition [to] ensure a fair and contestable digital market and to regulate Big Tech,” he said.
The DMA will now move to a plenary vote in December 2021. Negotiations with EU governments are then expected to start in 2022.
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