The DMA takes aim at the market power of so-called ‘gatekeepers’, companies that operate large digital platforms – whether they be operating systems, social networks, app stores, search engines or more besides – that have accumulated unprecedentedcompetitive advantages and, as a result, serve as gateways between consumers and businesses. It includes measures to prevent them from applying unfair practices, obliging them to give third-party services fair treatment on their platforms.
In September 2023, the Commission issued an initial list of six nominated ‘gatekeepers’ to which these new rules apply: Alphabet (the parent company of Google), Amazon, Apple, ByteDance (TikTok’s Chinese-headquartered parent), Meta and Microsoft.
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The designated platforms include these companies’ social networks, operating systems, browsers and marketplaces, and their messaging, search and video sharing services.
For other market players, the new rules for gatekeepers – which apply as of March 2024 – bring significant new opportunities, for example, through the opening of walled gardens and the diversification of app store competition.
The DSA, meanwhile, aims to tighten the regulation of illegal content and improve the transparency of user tracking and advertising. While the DSA includes some measures aimed at ‘very large online platforms’ – which include many of the DMA’s designated services, plus Wikipedia, Alibaba’s AliExpress, Zalando and Booking.com 12 – it is more universal than the DMA. Some of its measures apply to any online service provider with more than 50 employees and €10m in annual sales operating in the EU.
The UK’s counterpart to the DMA – the Digital Markets, Competition and Consumer Bill 13 – has been making its way through the House of Commons. The bill seeks to offer a template for regulation of digital marketplaces and also includes provision for UK competition law reform, as well as an overhaul of consumer rights protection.
A universal opportunity
Given the breadth of commercial services that are delivered or marketed through digital platforms, it is unsurprising that 92% of businesses consider them to be somewhat or highly strategic, second only to cyber safety. This includes 42% who consider digital platforms to be ‘highly strategically significant’ today, with banking and finance respondents most likely to identify them as such (52%).
Respondents are largely positive about recent and upcoming regulation of these platforms in Europe, with 92% of respondents expecting a moderate or significant commercial opportunity to arise. The most widely anticipated opportunities are the ability to develop a long-term technology strategy, an increased ability to disrupt competitors, and enabling new products, services or business models such as introducing direct distribution through sideloading or opening own app stores on previously closed mobile operating systems.
“If we look only at the Apple App store, this means that a market of approximately USD $383m will now be open to third parties and new regulation will prevent any future platform fees from being imposed in most cases,” says Pietro Fringuelli, co-head of the Global Technology, Media and Communications Group.
Content providers are especially positive about digital platform regulation, with 71% expecting ‘significant opportunities’ to arise (see Figure 7). App developers in particular may be among the chief beneficiaries of the DMA, as it prohibits gatekeepers from ‘self-preferencing’ –ie, giving privileged position to their own apps – or forcing developers to use bundled services, such as in-app payment systems.
92% of respondents consider digital platforms to be strategic to their business
But more than eight out of ten respondents (80%) also view digital platform regulation as a source of commercial threats. This proportion was also highest among content providers (87%), who clearly anticipate major changes to their industry – both positive and negative.
The top-voted threats are reduced resilience/security of technology systems, reduced capacity for a long-term technology strategy, and a reduced ability to compete with Big Tech companies.
This last concern was most pronounced among respondents from the life sciences and healthcare and energy and infrastructure sectors. These companies might have digital platform ambitions of their own and may fear that regulation will diminish their ability to realise them.
Concern over legal and compliance obligations from digital platform regulation is also relatively high, with more than three-quarters of respondents (78%) expecting it to have moderate or significant legal or compliance implications, such as increased technology/operational costs to ensure compliance and increased complexity of contracts.
A particular compliance concern surrounding digital platform regulation is that it is not always obvious what constitutes a platform, especially in the context of large online services. In some cases, businesses may be operating as a platform without knowing it, exposing them to the risk of regulatory penalties.
After many years of discussion, Europe’s regulatory regime for digital platforms is now falling into place. If in-house counsel have not yet assessed its impact on their organisations, now is the time to do so.
78% of respondents expect digital platform regulation to have negative legal or compliance implications.
Towards energy platforms
Digital platforms are still emerging in the energy sector, but they have the potential to boost the efficiency and flexibility of energy markets by connecting supply and demand more effectively than today’s grids.
“Within the energy sector, digital platforms are perceived as an opportunity to achieve sector priorities such as energy efficiency and ensuring security of supply, despite the volatility of renewable energy generation,” explains Shaghayegh Smousavi, a partner at CMS specialising in the energy sector.
“Sharing data via digital platforms can lead to operational efficiencies,” she adds. “Digital platforms can also be a tool to achieve decentralisation”, allowing more energy to be generated closer to the point of consumption. While only a third of survey respondents from the energy sector say platforms are ‘highly strategically significant’ to their organisations today, nearly twice as many (63%) expect them to reach this significance in three years’ time.
Digital platforms rely on data sharing – energy producers must share details of their output and capacity so the market can adjust. Energy respondents are the most likely to acknowledge the strategic significance of non-personaldata (NPD): 16% say it is highly strategically significant today and 29% believe it will be in three years’ time.
“NPD is viewed in the energy sector as a high potential source for new client-orientated services, especially among the larger utilities,” says Smousavi. “They recognise that data is the new gold.”
Within the energy sector, digital platforms are perceived as an opportunity to achieve sector priorities such as energy efficiency and ensuring security of supply.
Shaghayegh Smousavi, MBA, Maître en droit des affaires
Shaghayegh Smousavi, Partner, CMS
