EU Digital Markets Act: more work needed

I’m disappointed the @EU_Commission’s proposed Digital Markets Act seems rather to be a Digital Conglomerates Act (as the UK’s Competition and Markets Authority (CMA) visualised (p.57) above for Facebook). Key parts are focused on stopping large “gatekeepers” providing core digital services (such as search, social media and operating systems) extending their monopolies into adjacent markets, which is a good starting point. But what about competition in those core services?

There are some provisions for that regarding OSes (and one for search) in Art. 6. But what about intermediation, social media, instant messaging, cloud, video sharing and #adtech, the other identified core services (Art. 2(2))? Art. 6(1) b,c,e, f (partially) and k are all about operating systems. j is all about search engines. There is nothing specifically about social media — despite the CMA finding interoperability should be the principal remedy to make social media competitive again. I think Facebook’s lobbyists in Brussels did much better than Apple and Google’s.

Also included in the proposal is so-called data interoperability (Art. 6(1)(h), a favourite of the German competition economists that advised the Commission and German government). But this isn’t enough for social media, since users still need to maintain an account with the existing monopolist, and hence remain subject to what EFF (accurately) describes as the “sprawling garbage-novella of abusive legalese Facebook laughably calls its ‘terms of service’”.

The planned “new competition tool” was supposed to allow the EC to impose remedies in markets that had already “tipped” into monopoly (which is true of most of these “core services”.) But it’s instead been watered down into a process for identifying new gatekeepers/core services/anticompetitive practices, and enforcement for systematic non-compliance 😑  Lewis Crofts notes it’s been diluted so far there’s almost nothing left (a homeopathic competition remedy?) Nor is Cristina Caffarra particularly impressed on other structural aspects.

Let’s hope the European Parliament and Council are ready for some serious amendments next year! I’d suggest, before the final semicolon of #DMA Art. 6(1)(f), inserting “or industry-standard features of its core platform service”. “Industry-standard” leaves space for gatekeeper service innovation. UPDATE 1 May 2021: End users should also have these rights, and specifying that here saves problems with the definition of business user in Art. 2(17). The full text of Art. 6(1)(f) would then be:

• (f)  allow business users, end users, and providers of ancillary services access to and interoperability with the same operating system, hardware or software features that are available or used in the provision by the gatekeeper of any ancillary services or industry-standard features of its core platform services;

A more complex option would be a sub-clause dedicated to social media (in the same way j is dedicated to search engines, and several other sub-paras are dedicated to operating systems): 

(ff)  allow business users, end users, and providers of ancillary services access to and interoperability with the same industry-standard service features that are available or used in the provision by the gatekeeper of any social media or interpersonal communications core platform service;

(ff) would be in addition to the Commission proposal (f), whereas the amended (f) above would replace the Commission’s, and remove the need for (ff).

An even more complex option would be to amend the European Electronic Communications Code to add social networking services to its definition of interpersonal communications services in Art. 2(5), hence giving the Commission and national telecoms regulators the detailed powers in Art. 61(2)(c) to impose interoperability requirements. (The member states must apply the EECC by next Monday! Art. 124.) But the EECC provisions are complex, slow, and unwieldy, so I think it’s a better idea to amend the DMA proposal.

PS I see @Twitter is (for now) about €31bn short of being a #DMA gatekeeper! (Art. 3(2)(a), Market capitalisation of €65bn.)

PPS Article 6 is subtitled “Obligations for gatekeepers susceptible of being further specified. Article 5 and 6 obligations can both be updated following a market investigation” (Art. 10). But it seems “further specified” is used here in the narrow sense that under Article 7(2) the Commission may specify particular measures if the gatekeeper’s own “do not ensure effective compliance with the relevant obligations laid down in Article 6” — which are themselves narrow.

PPPS Art. 1(5) would override member state laws — a common US federal tactic to overrule stronger state laws on issues such as privacy. The EC may feel this important to justify the DMA’s TFEU Art. 114 Single Market legal basis. Can Germany pass its competition law amendment section 19(a) this month, and the @Kartellamt impose interoperability on Facebook from January, before the DMA comes into force?! And can the UK’s Digital Markets Unit do this for the 65m residents of Brexitania?

UPDATE: Simonetta Vezzeso noticed Recital 9 specifies the DMA is without prejudice to “national competition rules regarding unilateral behaviour that are based on an individualised assessment of market positions and behaviour, including its likely effects and the precise scope of the prohibited behaviour, and which provide for the possibility of undertakings to make efficiency and objective justification arguments for the behaviour in question. So the Bundeskartellamt can go ahead with its new national law s.19(a) powers!

UPDATE 2: End users should also be explicitly protected in the “update” procedure in Art. 10, so 10(2)(a) should be amended as follows:

(a) there is an imbalance of rights and obligations on business or end users and the gatekeeper is obtaining an advantage that is disproportionate to the service provided by the gatekeeper to either group; or

A colleague tells me Art. 10 may well be an illegal over-delegation to the Commission, and many member states are unhappy with it. He also suggests Art. 25 should be amended to allow for behavioural remedies after a first infringement. Article 16 allows both behavioural and structural remedies, so amending that to allow intervention after a single infringement results in an unnecessary battle — i.e. when there should be structural remedy powers. Adding behavioural remedies into Art. 25 avoids that.