European Parliament agrees on new rulebook for digital markets

  • The European Parliament has voted yesterday evening on the Digital Markets Act, the new EU proposal on competition in digital markets.

  • The vote was passed with a broad majority: 642 votes to 8 and 46 abstentions.

  • “Stringent requirements for gatekeepers will open new opportunities for innovative SMEs that have the ambition to compete in the digital markets”, says Sebastiano Toffaletti, Secretary General at DIGITAL SME.

The Digital Markets Act has been adopted by the plenary of the European Parliament last evening. “The Digital Markets Act will make it much easier for small and medium-sized enterprises to get to you (the citizens)”, said Executive Vice-President Margrethe Vestager, who is also the Commissioner for Competition. The vote in the European Parliament clears the way for the law to be discussed and voted in the second chamber of the EU institutions: the Council of the EU, consisting of member states representatives.

As a voice of small and medium-sized enterprises in the digital sector, the European DIGITAL SME Alliance is congratulating the European Parliament on this ambitious text. With the Digital Markets Act, Europe is positioning itself as a frontrunner when it comes to setting rules of engagement in the online space. The Digital Markets Act will set the global standard for competition online. It provides the opportunity to ensure a level-playing field and fair competition in the online environment. “These stringent requirements for gatekeepers will open new opportunities for innovative SMEs that have the ambition to compete in the digital markets”, says Sebastiano Toffaletti, Secretary-General of the European DIGITAL SME Alliance. “It is an ambitious text that will contribute to fair and competitive digital markets.”

As a reminder: the Digital Markets Act will set new rules for large online platforms, including social media and marketplaces. It will ensure fairness for (business) users who depend on important entry points, such as app stores and operating systems, provided by so-called ‘gatekeepers’ (like Google or Apple), to offer and access digital products and services. The law is limited to large platforms only – with thresholds set even higher than originally proposed (€8 billion turnover instead of €6.5 billion, €80 million market capitalisation instead of €65 billion). The legal proposal addresses important issues, including the access of business users of platforms to their end customers, the uses of data, and restrictions to self-preferencing and bundling. Therefore, the Digital Markets Act can only help to contribute to more fairness and a level playing field for SMEs.

Following the vote in the European Parliament on the evening of 15 December, the torch will be passed on to the Member States, who will discuss and vote on the proposal in the Council of the EU throughout the next months. According to Andreas Schwab, Member of the European Parliament in charge of the DMA, the aim is to ensure that the Digital Markets Act will be finally adopted by the Council and the European Parliament in 2022, and enter into force by November 2022 or January 2023. “We hope that the Member States will build on the work of the European Commission and Parliament and successfully complete this procedure in 2022”, says Sebastiano Toffaletti, Secretary-General of DIGITAL SME.

Myth-busting

Throughout the preparation of the legislative act, many different stories and interpretations around the DMA have been brought forward, some of which are simply not true. Therefore, we try to provide some myth-busting to counter some of the claims.

The Digital Markets Act is protectionist

Some have argued that the Digital Markets Act is only targeting US-based companies and is therefore protectionist. Here, however, it is important to note that in the US itself, several important bills are in the making, which addresses exactly the same issues that have been raised in the European context.

Large platforms help SMEs

Large players such as Amazon and Facebook have been running campaigns showing to what extent their platforms help SMEs. While selling online and reaching customers is certainly key, this does not mean that large platforms are the only way for SMEs to do so, and that they should be considered the only way. Being dependent on those large platforms holds enormous risks for society but also for the businesses themselves when it comes, for instance, to independently managing their engagement with their customers. Furthermore, statistics about how SMEs reach their end customer show that selling via their own websites and apps is still more important than platforms.

The Digital Markets Act may harm privacy

The Digital Markets Act aims to make closed ecosystems more open. Some argue that this may be at the cost of privacy. However, a large platform’s business model is mainly built around collecting as much data as possible about their users. A more open environment, built on interoperability, would allow users to opt for more privacy-friendly alternatives. In the long run, competition in digital services and products can help to open the path for more privacy-friendly solutions.

 

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