Holding the Big Tech giants to account has become an increasing priority for the EU as the presence of these platforms in people’s lives has grown exponentially. Just as this presence has increased, the way in which Big Tech’s products challenge traditional competition law has also developed. In response, the European Commission has used the EU Digital Markets Act (DMA), which came into force in March, to try and enforce competition in this sector.

In autumn 2023, the EU identified 22 ‘gatekeeper’ services run by the major tech companies – Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft – that will face stringent new rules as part of the DMA. In July, the EU General Court rejected an argument by ByteDance – TikTok’s parent company – that it didn’t meet ‘gatekeeper’ requirements. In June, the European Commission also brought its first charges under the DMA. Among other preliminary findings, it found that Apple’s business models don’t allow app developers to communicate freely and contract with their end users, and that Meta’s pay-or-consent advertising model breaches the new rules.

‘No one was expecting so much enforcement activity by the Commission with regards to the DMA,’ says Simon Spangler, a partner specialising in EU competition law at Oppenhoff in Frankfurt. Spangler is particularly interested in how the Commission is using the DMA to target specific elements of Big Tech practice, such as the policies underpinning Apple’s App Store. 

‘This wasn’t possible in the past, because there was only abuse of dominance, not detailed obligations,’ Spangler explains. ‘Now, it’s much easier to say to companies, “you don’t fulfil the obligations.”’ In early August, perhaps bowing to pressure from the EU, Apple announced that it would be revising its fees and requirements for app developers.

Peter Alexiadis is Deputy Editor of the IBA’s Business Law International journal and a visiting professor and scholar at King’s College London. He says the Commission’s use of the DMA demonstrates the ‘huge onus they’ve put on themselves to be active decision-makers. They’ve hired as many people as they could in the circumstances and are working at the sort of productivity levels that rival the Merger Task Force in its heyday.’

Alexiadis believes that digital platforms may not have fully grasped the sui generis nature of the DMA – which, while proceeding on the basis of competition law-developed theories of harm, bites with much sharper regulatory teeth. This genesis in competition law investigations ‘may have instilled the false belief that the DMA required the establishment of a theory of harm in each case, coupled with a protracted period of give-and-take as regards remedy negotiations until the Commission could be satisfied,’ he says. 

Instead, the Commission has taken the DMA’s key principles – ‘contestability’ and ‘fairness’ – and quickly required compliance with a series of broadly designed obligations. ‘This is a very different approach to the bespoke model that will soon prevail in the UK,’ explains Alexiadis. 
Andrew Ward is Publications Officer for the IBA Antitrust Section and a partner at Spanish firm Gomez-Acebo & Pombo. He compares the speed with which the Commission has released its findings – and how quickly it expects the digital platforms to respond – with investigations conducted before the DMA. ‘Famously, when it came to Google Shopping, something like six different iterations of the Google Shopping service came out during the Commission’s investigation,’ he says.

But he worries that the Commission’s interventionism is forfeiting the DMA’s early potential to create a more collaborative relationship between regulators and Big Tech. ‘There’s a Spanish saying – “to a hammer, everything looks like a nail,”’ he says. ‘The Commission is a competition authority. Everything looks like an antitrust case.’ The compliance reports required of digital platforms under the DMA add up to a comprehensive and usefully ‘transversal’ view of the digital sector, he says. ‘But the Commission seems only to view these as a shortcut to a case.’

A spokesperson for the European Commission told Global Insight that gatekeeper compliance reports are an ‘important transparency tool, useful also for businesses and consumers who want to benefit from the opportunities opened by the DMA.’ The spokesperson adds that preliminary findings are ‘without prejudice to the outcome’ of any investigation. In defence, gatekeepers have the right to examine and respond to investigation documents. The Commission continues to be open to ‘constructive dialogue with gatekeepers’, even during enforcement action, says the spokesperson.

The Commission’s spokesperson also highlights that regulation and competition enforcement already coexist in sectors such as energy, telecoms and financial services. The DMA addresses unfair practices that fall outside of existing EU competition control rules or that haven’t ‘always been tackled in the most effective way,’ the spokesperson says, because of the ‘systemic nature of these behaviours’ as well as the ‘case-by-case nature of competition law.’ 

Standoffs may still lie ahead, with Apple now citing ‘regulatory uncertainties’ and ‘interoperability requirements’ under the DMA as a reason for delaying the release of AI features on EU iPhones. ‘The key players may well seek to exert pressure on the Commission to be less rigid in the way the gatekeeper rules are applied,’ says Julian Hamblin, Senior Vice-Chair of the IBA Technology Law Committee and a partner at Trethowans in the UK. 

As the relationship between the European Commission and digital platforms evolves via the DMA, one inherent risk, says Alexiadis, is that ‘excessive regulatory intervention leads to lowest common denominator services being made available,’ with Big Tech seeking to avoid confrontations with the Commission by taking a conservative approach to product developments. It’s far too early to tell whether that is a realistic scenario. ‘Given the “prisoner’s dilemma” investment situation faced by most digital platforms, any such shortfall in innovation might not be a credible option,’ he says.

Ultimately, Simon Spangler believes the Commission will ‘try to make the DMA easier and more flexible – especially if they see gatekeepers avoiding business in Europe.’
 

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