EU Digital Markets Act forces tech giants to play fair

Competition on digital and analog markets greatly differs from each other. Unfortunately, it seems that legislators tend to be somewhat slow to catch up to the latest developments on digital markets. Well, thanks to the Digital Markets Act, that is about to change.

The Digital Markets Act, (DMA) is a new piece of EU legislation that aims to curb the unfair practices of some tech giants (referred to as “gatekeepers” in the text) on the digital markets. This in turn will ensure a fairer competition, and consumers can enjoy a larger selection of digital service providers to choose from.

Tech giants like Facebook and Google have the upper hand when it comes to independent apps running on their platforms. Not only does this prevent new actors from entering or reaching significant growth on the market, but it also puts consumers at a great disadvantage.

The DMA aims to put a stop to this practice. With the new legislation in force, tech giants will have to stop giving preferential treatment to their own products and allow independent providers better access to their platforms. For e-Commerce, this suggests the end of Amazon’s preferential treatment of its own product listings and services.

This also means that should they wish to do so, smaller messaging services like Signal will be able to work with larger competitors like WhatsApp or Facebook Messenger to allow users to send messages between these platforms.

Another great news for brands is the easier access to sales transaction data on e-Commerce platforms. This information will give a huge boost to your targeting efforts - and take away the unfair competition advantage of the e-Commerce platform hosting your listings.

A person looking at data charts on a tablet

In addition, tech users will have greater freedom in deleting pre-installed apps on their devices (bye-bye useless undeletable apps), freely choose their preferred browsers, virtual assistants and search engines, and can even stop “paying with their data”.

You know how you have to agree to a platform accessing your data if you want to use a certain app? This practice allows tech giants to learn many things about your online behaviour. If you don’t agree, you can’t use the app. That’s a tough choice, and consumers are often forced to choose to share their data because they need the functionalities of the app, even if they have qualms about it.

Well, this stops now. Thanks to the DMA, tech giants won’t be able to combine various sets of data coming from different sources and use it for the purpose of personalised advertising. Moreover, if a user doesn’t agree to the usage of their data, the platform still has to provide access to the app.

The DMA provides a clear definition about which platforms are affected by it. According to the text, gatekeepers are companies that

•  “have had an annual turnover of at least €7.5 billion within the EU in the past three years or have a market valuation of at least €75 billion;
• have at least 45 million monthly end users and at least 10 000 business users established in the EU;
• control one or more core platform services, i.e. marketplaces and app stores, search engines, social networking, cloud services, etc. in at least three member states.”

Smaller companies are generally exempt from being a gatekeeper, except in special cases where a platform may become one, and is thus deemed to be an “emerging gatekeeper” by the European Commission.

This means that today, roughly 10-15 companies fall within the gatekeeper category, including Google, Apple, Facebook and Amazon.

Should a tech giant not adhere to the DMA, the Commission may impose fines up to 10% of the company’s global turnover. This rises to 20% in case of repeated incidents, and even a ban on acquiring new companies in serious cases.

The DMA was adopted on 15 September 2022 and was published in the Official Journal of the European Union on 12 October 2022.

Then a six-month period of adjustment follows, during which the Commission notifies gatekeepers of their status and responsibilities. Those who don’t agree with their status may challenge the designation.

Then, another six-month period is granted to gatekeepers to adjust their practices, which means that by late 2023/early 2024, the provisions of the DMA should be in full force and complied with by tech giants.

Picture of an open gate

Another piece of legislation, the Digital Services Act (DSA) is in the works as well. The DSA aims to better protect users’ rights, diminish illegal content as well as increase the transparency and accountability of platforms. This latter infers that platforms should know their third-party providers to better protect consumers from dangerous goods, including counterfeits. Understandably, we online brand protection experts are very excited about this draft law and can’t wait to see it in action once it’s adopted.

The Council of the European Union has formally adopted the DSA on 4 October 2022. After the Presidents of the European Parliament and the Council of the EU have signed it, the legislation can be published in the Official Journal of the European Union and will start to apply fifteen months after that.

The rules set forth by the DMA significantly change the landscape of e-Commerce, at least in Europe. However, a lot depends on how tech giants react and whether they really adjust their behaviour, or if they simply find a new way to put themselves ahead of the competition.

All that remains to be seen. But let’s just assume for a second that the DMA rules will come into effect and have the intended results. With the unfair practices of Amazon & Co. gone, smaller providers, brands and sellers have a much better chance at being seen, especially with the many advertising choices these platforms usually offer.

Meta’s encounter with the DMA

The European Commission has accused Meta, the parent company of Facebook and Instagram, of violating EU competition rules. The controversy centres on Meta's "Pay for Privacy" model, which offers users a choice between paying for an ad-free experience or accepting personalised ads. The Commission argues that this limits users' control over their data and breaches the Digital Markets Act, which aims to ensure fair competition and user privacy. Meta could face fines up to €12.5 billion if found guilty.

Find out everything about Meta’s Pay for Privacy model!

Meta defends its practices, claiming compliance with existing laws and expressing a willingness to engage in further dialogue with the Commission. This case underscores the ongoing tension between regulatory bodies and tech giants over data privacy and market fairness. The outcome of this conflict will be leading the way for future decisions in this sector.

As posed by this example e-Commerce can become a more even playing field for everyone involved, resulting in great advantages for both brands and customers.

Unfortunately, this goes for fraudsters as well. While the self-promotion and gatekeeping many tech giants do definitely harms competition, it also keeps fraudsters in check, at least to some extent. After all, we can safely assume that companies like these wouldn’t knowingly distribute IP infringing products, and it’s usually third-party sellers that hurt brands’ trademark rights on e-Commerce platforms.

However, with competition becoming fairer, we can also expect counterfeiters, grey market sellers and other IP infringing fraudsters to get a better chance at finding customers. But you don’t have to accept this as an inevitable situation for your brand.

globaleyez’s trademark protection services have no correlation with the level of competition on a marketplace. This means that regardless of when the DMA comes into effect and how it changes the face of e-Commerce in the EU, our services will be just as effective as they are today.

However, they’ll probably be more essential than ever.

Our marketplace monitoring service, for instance, detects IP infringing listings on over 150 marketplaces worldwide. Fast and effective software-based searches combined with decades of expertise quickly discover potentially infringing listings, and extensive filters ensure the separation of harmless listings from fraudulent ones.

Social media monitoring does the same on social media platforms, with the added bonus of detecting other types of infringing content in ads, brand pages, closed buying groups and much more. Incidentally, social media monitoring is also a great addition to our marketplace monitoring because operators of IP infringing marketplace accounts we encounter on marketplaces tend to use social media platforms as an additional and cheap traffic source (either towards their listings or towards possible webshops or standalone websites). By detecting these connections, we can find out as much as possible about the sellers, if you want us to.

Once we establish that a listing or other type of content is indeed infringing on your IP rights, we can enforce your rights and ensure its timely removal from the marketplace or social media platform.

Unfortunately, counterfeiters are not the only ones infringing on your IP rights. A business partner who doesn’t comply with your wishes can be just as harmful, or even more so. For example, what if an authorized seller puts your products on a marketplace not greenlighted by you? Or what if a supplier sells your patented product parts to other companies without your consent? Business partners like these are largely responsible for creating grey markets, extremely harmful to your brand’s reputation and bottom line.

To stop these damaging scenarios and more, we devised our partner compliance service. With versatile methods including software-based searches and mystery shopping, we detect whether your business partners act in accordance with their contracts and give you actionable advice on next steps.

The DMA has the potential to create a fairer e-Commerce environment for brands and honest sellers in the EU. How online marketplaces and tech giants like Amazon, Google and Co. will react and adhere to the new rules remains to be seen.

One thing is for sure though: fraudsters will definitely find a way to adapt and exploit the new situation. Luckily, your brand doesn’t have to contend with that: globaleyez is ready to tackle IP infringements on- and offline for you.

Contact us today and let’s get started on establishing an effective and highly personalized trademark protection strategy for your brand!