The Impact of the Digital Markets Act on the Regulation of Digital Markets

*This is an AI-powered machine translation of the original text in Portuguese.

**The image used in this article was created by a generative artificial intelligence.

The Compliance Day with the Digital Markets Act (DMA) is a relevant milestone in the implementation stage of European Union regulation regarding 'digital markets.' The DMA primarily targets the so-called 'gatekeepers,' defined as dominant providers of digital services that play a crucial role in connecting businesses and consumers. Thus, the European Union has set an agenda guiding these gatekeepers. This process began with the identification of essential platform services through an assessment of aspects such as control of market access, impact, and dominant position that makes them 'essential intermediaries.' On September 6, 2023, the European Commission classified six companies — Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft — as gatekeepers, covering 22 'core platform services.'[1] With six months granted for compliance with DMA regulations, this phase was characterized by changes to the operations of these companies in the European Union.

Confirmed the services and companies that would be classified as gatekeepers, the Compliance Day is then the deadline for these agents to demonstrate how they will comply with DMA rules. As it is dynamic, the Commission's monitoring process regarding the activities of gatekeepers should be a significant part of the changes brought about by the DMA. In the months leading up to compliance, companies designated as gatekeepers made adjustments — in some cases, substantial ones — to their business practices, including aspects such as data portability and the prohibition of self-preference practices.

However, the implementation of the DMA has also sparked debates and criticisms, including questions about the rigor of rules limiting the development and integration of new and existing services by technology companies. Some of the companies designated as gatekeepers have expressed concerns related to user privacy and security, arguing that obligations such as permission for sideloading, interoperability requirements, data sharing, and other requirements could put users at cyber risks, privacy risks, among others.

Considering the concept of gatekeepers and core platform services, the list of services and companies may change periodically, depending on market changes and the Commission's understanding of these central concepts of the regulation. The definitions of 'gatekeepers' and 'core platform services' have been criticized for their open texture, causing regulatory uncertainties. The breadth of obligations and the broad objectives of the DMA have also attracted criticism for potential unintended consequences, potentially harming the markets it seeks to regulate and disadvantaging consumers.

Partly due to these criticisms, the phenomenon known as the 'Brussels effect' — an anticipated consequence related to the DMA — may have been fragmented. On the one hand, there has been an increase in the discussion of the regulation of digital markets worldwide — including in Brazil — but not without criticism of the model adopted in Europe. On the other hand, the uniformity of business practices has not proven to be the rule in the activities of those companies designated as gatekeepers by the DMA outside the European bloc. Historically, when regulations are implemented in a specific country or region, global companies tend to adapt to the stricter requirements. This was observed with the implementation of the General Data Protection Regulation (GDPR), which led companies to adopt it as a global benchmark. However, in response to the DMA, gatekeepers, in many cases, chose to fragment their services, adopting different practices inside and outside Europe.

As the Compliance Day of the DMA approached, the judgment of the Spotify vs. Apple case also raised new questions about the Commission's confidence in its own regulations. The decision, made on March 4, addressed issues that theoretically could be resolved by the DMA. The centralization of downloads and payments on the App Store, for example, had already been revised by Apple in compliance with the new obligations of the DMA. Thus, the decision has been criticized for redundancy with the objectives of the regulation that the Commission approved. Despite this, the European Commission imposed a fine of 1.8 billion euros on the company, aiming to discourage future violations. However, the imminent entry into force of DMA obligations for gatekeepers and the company's commitment to change the rules for which it was sanctioned have been pointed out as relevant factors in the criticism of the decision.

In the same vein, comments on the decision have indicated that it would highlight the connection between the rules established by the DMA and antitrust issues, a fact that stands out when observing the responsibilities imposed on gatekeepers and decisions in antitrust cases in Europe. This observation, however, suggests the high complexity of the practices that the DMA aims to regulate, which do not easily fit into the logic of ex ante prohibitions, especially when these are vague. Specifically, generic preventive prohibitions intensify this issue, as the concrete application of the norm will require a detailed analysis that takes into account market efficiencies and other factors, significantly resembling antitrust analysis; this has been one of the criticisms of Bill 2768 in Brazil.

The entry into force of the DMA marks a relevant inflection point, deserving attention to how the changes introduced by the regulation will affect various aspects, such as market dynamics, user experience, and the strategies of gatekeepers in limiting their adaptations to the DMA to the European context. This last aspect, in particular, should foster a comparative scenario between markets operating under the DMA and those unaffected by it, providing a clearer perspective on the impact of the regulation on the mentioned dynamics in the long term.

[1] https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4328

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