Digital Markets Act

The Digital Markets Act is a law of the European Union. It has been in force since 2023 and targets a small group of very large technology corporations. This means companies like Apple, Google, Amazon, Meta and Microsoft. These companies control gateways that almost no one can bypass: app stores, search engines, operating systems for phones, large social networks. Anyone who doesn’t appear there is practically invisible to customers. The law therefore prescribes what these companies must do and what they must refrain from doing. The German name is Gesetz über digitale Märkte, but usually the English abbreviation DMA is used.

What the DMA is meant to change about the power of platforms

Classic competition law only takes effect once damage has already occurred. Authorities investigate, argue in court for years, and eventually impose a fine. By that time the market has often already been decided. Digital markets tend to tip quickly toward a single winner.

The reason for this is a self-reinforcing effect. A social network with many users attracts more users because their friends are already there. An app store with many apps attracts developers because that’s where the customers are. Small competitors, on the other hand, have hardly any chance, even if their product is better.

The DMA therefore intervenes beforehand, with fixed prohibitions and obligations. Violations can be punished with fines of up to ten percent of worldwide annual revenue, and up to twenty percent for repeat offenses. For corporations with hundreds of billions in revenue, these are enormous sums. In extreme cases, the EU Commission may even prohibit a company from making acquisitions.

Gatekeepers, prohibitions and obligations

Central to the law is the term gatekeeper. This is what the DMA calls a company that controls an important gateway to the digital market. The EU Commission decides who belongs to this group based on clear thresholds. These include annual revenue in Europe of at least 7.5 billion euros and at least 45 million monthly users in the EU. Currently, around seven corporations with about two dozen services are classified this way.

A list of rules then applies to these services. A gatekeeper may not favor its own products in search results. It must allow users to delete pre-installed apps and install programs from other sources. Messenger services must open up to messages from other messengers. And data from different services of the same corporation may not be merged without consent.

Oversight lies with the EU Commission itself, not with national authorities. Companies must explain on their own how they comply with the rules. If this is not sufficient for the Commission, it opens proceedings. This has happened several times, for example against Apple over the rules in its app store.

The DMA on your own phone and in the news

Some consequences can be seen directly on the smartphone. In the EU, browsers ask during setup which search engine you want. On iPhones, alternative app stores are permitted, but not outside Europe. Some apps are now allowed to link to payment pages outside the store, saving the platform operator’s fee.

In business news, it’s mainly the fines and disputes that make headlines. These involve billion-euro fines, lawsuits by corporations against their classification as gatekeepers, and complaints that rules are only being implemented for show. Companies also frequently delay new features in Europe, citing legal concerns. Critics call this a side effect of the law, while others see it as a negotiating tactic.

It is important to distinguish this from a similarly named law. The Digital Services Act regulates content, such as dealing with hate speech and disinformation. The Digital Markets Act, on the other hand, regulates competition and market power. And the AI Act specifically concerns artificial intelligence. The three are often confused, but they pursue different goals.