Brussels, 24 June 2024
Thank you Martijn for hosting this timely conference! And thanks to everyone for joining us today. It is a great pleasure to share my thoughts on the Digital Markets Act with you.
Looking around the room, I see innovators, SMEs, and competition law enforcers from across the European Union. I like to think of us as Team DMA. Because it is going to take teamwork to make the Digital Markets Act a success.
Looking at the innovative talent we have here today, I am confident that we will succeed. Some of you already compete on the browser market, others develop fintech that facilitates payments and credit, or create alternative app stores and search engines that don’t follow you everywhere. With the DMA, it is time to unleash all of that talent. By making digital markets across the EU more open and fair we can make a difference. More choice for European citizens and more opportunities for businesses to thrive.
The digital sector has brought a lot of benefits, but it has also created many issues. Over the years, we saw that dominance and entrenched positions became the norm, sometimes leading to abuses. Digital markets have not always lived up to their promise of helping small businesses scale up and reach more customers. In our antitrust practice we saw that SMEs face many challenges, in particular those that operate only online.
Looking down memory lane, we created the DMA for two main reasons:
The first reason was what we call contestability. In football terms, this is about getting your players onto the pitch. Imagine how easy it would be for one of the teams to win their game tonight if they made sure that the rival team couldn’t even get into the stadium. This is in fact what we often see in the digital world: many companies get stuck in their changing room. Because someone has locked it and thrown away the key. Obviously, network effects play a role, but so does the unfair behaviour of digital giants who hold the door key. And when large platforms do not feel any pressure from potential competitors, innovation and growth will slow down, harming citizens and society.
The second reason was one of fairness. The playing field should be level. Because sometimes we do see smaller competitors play even up with the bigger favourite they are up against – just like we saw Denmark play 1 all in their latest game in the Euro 2024 against England who, at least on paper, is a better team. So, it is important that everyone can have their fair chance to make it. In digital markets it often looks as though some are playing downhill while others have to struggle uphill. For instance, the big players often push their own offers on their platforms and make it difficult for consumers to access rival offers. This is unfair on smaller and new players trying to reach consumers. Over the years, many SMEs have disappeared from the market because they were no longer visible on search engines and digital platforms controlled by big gatekeepers.
So we saw the need to establish a few ground rules to level the playing field again. To make digital markets both contestable and fair for existing and future rivals. By addressing systemic anti-competitive behaviour before it becomes entrenched. Before it can do any damage.
So how does the DMA benefit small businesses and innovators?
First, it does not add any regulatory burden for smaller companies. The new responsibilities fall only on the biggest players, the so-called gatekeepers. These are typically multi-platform ecosystems.
The thresholds for becoming a gatekeeper are significant: you need a customer base of around 10% of the EU population. So far we have designated only seven major gatekeepers, covering 24 core platform services. These include search engines, social networks, video sharing platforms, and operating systems.
Second, the DMA is designed to create new opportunities for startups and SMEs by opening up ecosystems.
For instance, gatekeepers must allow business users to communicate directly with their app users, and to use alternative payment systems, browsers, and search engines. They must also allow the use of third-party app stores and enable sideloading so that third-party apps can be accessed outside the main app store.
And they must be fair in their rankings: they must not favour their own products or services over similar third-party offerings in search results or app store rankings.
As for data, they cannot use those generated by their business users to develop competing apps or services. This prevents gatekeepers from using those data against competitors. And they must allow users to move their data to other platforms or to share their data across different platforms.
And finally, gatekeepers must open their ecosystems to allow smaller companies to operate and offer their services to users.
All of this throws open the stadium gates for competition. It creates new opportunities for data-driven services. But it’s up to innovators to create new offers that attract users to take advantage of these new options. It is up to you to draw in the crowds and to fill the stands.
And so my message to business leaders and innovators is this: focus on understanding and leveraging the DMA’s opportunities to your advantage. Find out how the DMA can benefit you. Engage with your investors and integrate these opportunities into your business strategies. And let us know if things don’t work.
This brings me to the third advantage for SMEs, which is that they are actively included in monitoring compliance with the DMA. We involve consumers, small businesses, and civil society groups in the dialogues we have with the Big Tech firms. Some of you may have attended the compliance workshops we have organised. We need your input to ensure that the DMA is working as intended and benefits everyone. The more you speak up about your market problems, the easier it is for us to enforce the rules. And the more likely it will be that the gatekeepers accept compliance as the only logical option.
Because the ball is now in the gatekeepers’ court. They have to convince us that the measures they take will achieve full compliance with the DMA. And where this is not the case, we will intervene. Within a month of the compliance deadline, we opened no less than five non-compliance cases. Today, we are opening a sixth one: we will look into Apple’s new business model: the commercial terms Apple imposes on app developers who want to reach end users on the iOS platform. The criteria these app developers have to meet to even be allowed to operate as alternative marketplaces or make apps available via sideloading. And the complex user journey for those users who want to download and install alternative marketplaces and sideloaded apps.
We are concerned that Apple designed its new business model to discourage app developers and end users from taking advantage of the opportunities afforded to them by the DMA. The letter of the DMA is clear: gatekeepers have to allow for alternative app stores to establish themselves on their platforms; and for consumers to be fully informed about the offers available to them. So that they can freely choose where they want to source their apps, and at what conditions.
And there is more. Today, and after less than three months from opening, we adopt our first Preliminary Findings in a case of non-compliance. And it is again about Apple. About the many ways in which their new terms fall short of the DMA requirements regarding steering of users to options outside the Apple App Store. As they stand, we think that these new terms do not allow app developers to communicate freely with their end users, and to conclude contracts with them.
Of course, our work on the other four non-compliance cases we opened in March of this year is going full speed. Each case goes at its own pace, but each and every one of them is a priority to us.
Fortunately, we are not alone in this challenge. National regulators and competition authorities all play a crucial role in enforcing the DMA. They can start investigations for non-compliance. This has several advantages. National authorities often have closer links with smaller local businesses, making it easier for these businesses to report issues. The ECN members are our eyes and ears on the ground.
And if a member state should decide to have their own rules on digital markets, which is possible within certain boundaries, then it will be more important than ever to coordinate well with the Commission. The necessary mechanisms for this are already in place within the European Competition Network.
For the DMA to succeed, we will have to use every tool in the box, from interim measures, and commitments, to infringement decisions and fines and to structural remedies as a last resort. But effective enforcement across digital markets will also mean that we keep on using our competition policy tools.
Antitrust will continue to play a big role, not just for non-gatekeepers but also for gatekeeper services that aren’t yet designated or may not be covered by the DMA. For those services, competition law will continue to be the main tool for the Commission and national competition authorities to step in. And so we continue our antitrust investigations in digital markets, such as those involving Apple, Facebook, Microsoft and Google. And we continue to look at other issues that affect competition in digital markets, such as no-poach agreements, which are bad for innovation and workers in the tech industry.
And merger control continues to play its part too. Under the DMA, gatekeepers must report any acquisition plans. And so, if needed, we can use merger enforcement to investigate a problematic acquisition even if it does not meet our usual turnover thresholds. Because prevention is always better than cure.
The Commission and the ECN members will work hard to ensure the DMA is effective. We will make sure that the stadium gates are kept open, the pitch is level and play is fair. You can leave that to us.
But we need you—startups, SMEs, and investors—to take the ball, run with it and score those goals. We are at a crucial point for digital markets, and we all need to pitch in. Together as Team DMA, we can make the digital game competitive again.
Thank you.
Source – EU Commission