The Digital Markets Act (DMA) is the European Union's (EU) new law whose initial purpose is to make the digital marketplace fairer and more competitive. The rule came into effect on November 1, 2022, but the regulation will go through an implementation phase and the law will only be applied in fact from May 2, 2023.

In addition to the DMA, the Digital Services Act (DSA) and the Data Governance Act (DGA) are other pieces of legislation that will soon be put in place and, with the DMA, are part of an ambitious European Union strategy to make the current decade the "Digital Decade". To make this happen, the European Commission has proposed some targets for the digital transformation of Europe by 2030.

In order to achieve the proposed goal, the DMA seeks to limit the power of gatekeepers, companies that provide essential platform services such as online intermediation, search engines, social networking, video sharing, interpersonal communications, operating systems, cloud computing, and advertising.

The regulation establishes some criteria to identify a gatekeeper:

  • have a strong and active economic position in at least three EU countries;
  • operate an essential platform service that serves as a gateway for professional users to reach end users; and
  • have a solid market position.

According to the British research institute Center for Economic Policy Research(CEPR), these criteria will not only reach the core businesses of the biggest players such as Google, Amazon, Facebook/Meta, Apple, and Microsoft (Gafam), but also platforms such as Oracle and SAP, which may end up being included in this list.

The list of duties of a gatekeeper covers situations related to conflicts of interest that arise in the relationship between it and its business users. It also deals with preserving the right to challenge in the relevant markets, with encouraging multi-homing, switching, lowering barriers to entry, and increasing transparency.

The prohibition for the gatekeeper to combine personal data, unless a specific choice has been presented to the end user and he has given his consent, is one of the obligations under the regulation, for example.

In this respect, the regulation went in the same direction as the German precedent. In 2019, the German Competition Authority (Bundeskartellamt) banned Facebook from combining user data. At the time, the platform's terms and conditions provided that users could only use the social network under the precondition that Facebook could collect user data off the website, or in smartphone apps, and assign that data to the user's Facebook account.

Another important self-executing obligation is the permission for business users to promote offers and enter into contracts with end users purchased on the platform through off-platform channels.

In this regard, the European Commission announced in 2020 the opening of antitrust investigations aimed at evaluating the rules set by Apple for app developers. The investigation dealt with the mandatory use of the in-app purchase system and the restrictions on iPhone and iPad developers' ability on alternative payment possibilities. In addition to limiting the payment method, Apple was charging a commission fee on transactions.

As for the right to contest, the DMA provides that the gatekeeper must provide advertisers and publishers with information about the price paid by the advertiser and the remuneration paid to the publisher for advertising services. This is to prevent competitors and advertisers from taking advantage and to make the process more transparent.

The regulation also brought in other changes that have been the subject of discussion. The first is the possibility for users to install apps from other distribution stores. With this, Apple users could install apps from Google Play or from websites.

The second is the interoperability of instant messaging programs. This would force, for example, WhatsApp (from Facebook/Meta) to receive messages from competing apps like Signal or Telegram.

In the event of non-compliance with some of the obligations set out in the regulation, the commission may fine the gatekeepers up to 10% of their total turnover in the previous year, and impose daily fines of up to 5% of average daily turnover.

And in Brazil?

The General Superintendence of the Administrative Council for Economic Defense (SG/CADE) recently opened an administrative investigation against Google for practices in the Android operating system. In the document opening the investigation, the SG relies on Google's conviction in the European Commission, which found exclusivity agreements between Google, cell phone manufacturers, and mobile network operators to be unlawful.

In the same competitive line, Mercado Livre reported, on December 5th of this year, the the opening of a case against Apple in CADE for anticompetitive practices. In a communiqué, Mercado Livre claimed that Apple imposes various restrictions on the distribution of digital goods and in-app purchases, including a ban on apps distributing third-party digital products and services, such as movies, music, video games, books, and written content.

Given this recent development and the importance of the DMA, not only for its impacts on large technology companies, but also for promoting a more competitive digital market, there is a high possibility that the Digital Markets Act will inspire similar legislation here in Brazil, much like how the General Data Protection Regulation (GDPR) had a strong influence on the creation of the General Data Protection Law (LGPD). There are even signs in this direction with Bill 2,768/22.

This bill, presented to the steering committee of the Brazilian House of Representatives on November 10, aims to change the Brazilian Civil Rights Framework for the Internet and the General Telecommunications Law, and would give Anatel the power to regulate and supervise digital platforms. The agency would be responsible for issuing rules on the operation of digital platforms that offer services to the Brazilian public, applying sanctions, deciding in the administrative sphere on the interpretation of the legislation applicable to digital platforms, and administratively settling situations related to conflicts of interest.

Although its creation was influenced by the DMA, Bill 2,768/22 presents some distinctions in its initial text.

An example of this is the creation of the Digital Platform Oversight Fund (article 15). To make it up, digital platforms that offer services to the Brazilian public would be required to pay an annual fee equivalent to 2% of their gross operating revenue.

The bill also classifies digital platforms as holders of the power to control essential access when they obtain annual operating revenue equal to or greater than R$70 million from offering services to the Brazilian public (article 9).

As for administrative penalties, the text provides for warnings, a fine of up to 2% of the economic group's revenues in Brazil in its last year of operation, mandatory and prohibitory obligations, temporary suspension of activities, and a ban on conducting activities (article 16).

The trend, therefore, is that although large technology companies have established themselves in a less regulated environment, they will need to adapt to an increasingly regulated environment. Everything indicates that the GDPR is just the tip of the iceberg. Both the DMA and the DSA are coming to sanctify this new reality that, it seems, will not be limited only to European territory.

When it comes to new regulations regarding the digital environment, there are numerous discussions. After all, everyone wants to get the most out of technology and innovation, and regulations somewhat slow down this process. However, establishing measures to combat anti-competitive practices in the digital environment potentially creates a fairer environment, conducive to economic development and beneficial to users.