The Good, the Bad and the Ugly (Digital Markets Law Changes): Part 2
This week is a crucial milestone for the European Union’s plans to regulate the digital economy, as key European Parliament lawmakers prepare to shape the fate of platform services from Google, Apple, Facebook, Amazon. and Microsoft.
Members of Parliament’s Internal Market and Consumer Protection (IMCO) Committee today discussed changes they want to make to the European Commission’s proposed Digital Markets Act (DMA) to ensure “Fairness and contestability” in the European digital economy.
The committee, which holds its pen on the Commission proposal, debates 1199 amendments. The draft opinions of the Committee on Economic and Monetary Affairs (ECON) and the Committee on Industry, Research and Energy (ITRE) presented interesting amendments, discussed in part 1 of this series. Now is the time to consider the “good, the bad and the ugly” of the IMCO draft report.
Some of the amendments push DMA in the right direction, making it more efficient at solving the issues that lawmakers wish to address, more flexible to accommodate the different business models of companies designated as gatekeepers, and more future-proof. According to Amendment 861,
“The gatekeeper shall be given the opportunity to enter into a regulatory dialogue, whereby the Commission may specify the relevant measures that the gatekeeper concerned must adopt in order to effectively comply with these obligations.”
The only way to get DMA fit for the digital age in practice, is to have a DMA executor suitable for the digital age, and this means addressing one of the concerns raised by the Commission’s own experts in digital competition policy. Digital markets are complex and rapidly changing, and it is difficult for regulators to keep pace. This leads to information asymmetries, a less dynamic regulator and a climate of suspicion and mistrust. a ex ante The framework should be for engineers and government experts discussing how best to balance competing goals and find the right trade-offs between the many effects of different digital product designs. Regulatory dialogue is the best way to achieve this, and encouraging it would help ensure that the application has the intended effects.
However, not all amendments are good and some could have counterproductive or unpredictable effects when implemented. Unlike amendments which seek to minimize unintended consequences of AMD, Amendments 889, 901 and 910 would remove articles which allow certain adjustment mechanisms and essential guarantees. This would risk making the DMA disproportionate and conducive to legal challenge, especially since it contains far-reaching and ambiguous obligations in Articles 5 and 6 that will apply to a variety of core platform services. , with a unique approach.
The ugly one
The IMCO amendments offer a series of proposals that could bypass good faith compliance attempts, leading to the very real risk of harming the quality of core platform services in Europe and the many consumers and business users. who benefit from it. Unrealistic deadlines in DMA are a real concern and have been suggested in the draft ECON and ITRE opinions also. Under the IMCO amendments, the time limit for companies to assess whether they meet the thresholds for “custodian” status would be reduced from three months to 2 months (amendment 526), 1 month (amendment 523, 525), 45 days (amendment 527), or even 10 days (Amendment 528). The deadline for complying with the gatekeeper obligations would also be shortened from six months to 4 months (amendment 579), 3 months (amendment 580), 2 months (Amendments 573, 578, 581, 582).
The reality is that complying with DMA will involve a level of technical complexity which has not even been estimated. Some obligations require designated custodians to transform internal company tools and technical infrastructure into services for competitors. Without a reasonable period of time to comply, this could result in either the creation of many new cybersecurity vulnerabilities or the complete shutdown of the service. Neither would be good for European consumers and business users who value basic platform services.
That is why amendments that would increase fines for breach of DMA obligations are also risky. Currently, the proposed fines are up to 10% of a company’s worldwide turnover, as in antitrust cases, but without any evidence of harm or connection to a company’s European activities. This makes them somewhat arbitrary, and a big risk especially for the most ambiguous obligations (and in the absence of regulatory dialogue). The amendments suggest increasing the fines up to 30 percent (Amendments 1099, 1007). This will encourage a very conservative and risk averse approach to implementation, and lead to the risk of over-compliance and degradation of core platform services that benefit many European consumers and business users.