Introduction.
In today's digital society, giant IT companies such as Google, Apple, Amazon, and Meta (formerly Facebook), which we use on a daily basis, are playing an increasingly important role. At the same time, however, problems such as "market domination by certain companies" and "unfairness of competition" are becoming more serious.
To remedy this situation, the European Union (EU) introduced the Digital Markets Act (DMA). This article provides a detailed overview of the DMA, its regulatory objectives, specific corporate responses, and the impact of the DMA on Japanese companies and consumers.
WHAT IS THE DIGITAL MARKETS ACT (DMA)?
THE "DIGITAL MARKETS ACT (DMA)" IS A REGULATORY LAW ADOPTED BY THE EU IN 2022 AND APPLIED IN STAGES STARTING IN 2023. IT TARGETS LARGE DIGITAL PLATFORM COMPANIES, KNOWN AS "GATEKEEPERS," AND ITS MAIN PURPOSE IS TO RESTRICT THEIR MARKET-DOMINANT BEHAVIOR AND PROMOTE FAIR COMPETITION.
PURPOSE OF DMA
THE "DIGITAL MARKETS ACT (DMA)" IS A REGULATORY LAW ADOPTED BY THE EU IN 2022 AND APPLIED IN STAGES STARTING IN 2023. IT TARGETS LARGE DIGITAL PLATFORM COMPANIES, KNOWN AS "GATEKEEPERS," AND ITS MAIN PURPOSE IS TO RESTRICT THEIR MARKET-DOMINANT BEHAVIOR AND PROMOTE FAIR COMPETITION.
Gatekeeper Definition and Target Companies
THE DMA DEFINES A "GATEKEEPER" AS A COMPANY THAT MEETS THE FOLLOWING CRITERIA
ANNUAL SALES IN THE EU OF AT LEAST €7.5 BILLION OR MARKET CAPITALIZATION OF AT LEAST €75 BILLION
MORE THAN 45 MILLION MONTHLY USERS IN THE EU AND MORE THAN 10,000 CORPORATE USERS PER YEAR
Providing the same core services for more than 3 years
Companies that meet these criteria and have been officially designated as gatekeepers by the European Commission include
Google (Alphabet): search, advertising, YouTube, Android, etc.
Apple: App Store, iOS, Safari
Amazon: Amazon Marketplace
Meta (formerly Facebook): Facebook, Instagram, WhatsApp
Microsoft: Windows, LinkedIn, Bing
ByteDance: TikTok (first non-European company to be designated)
DIFFERENCES BETWEEN THE DIGITAL MARKETS ACT (DMA) AND GDPR
The General Data Protection Regulation (GDPR) is an EU legal regulation that is often confused with the Digital Markets Act (DMA). Both are important laws that set the rules for the digital society, but there are clear differences in their purpose, scope, and regulatory content.
First, the DMA (Digital Markets Act) is a competition policy aimed at giant platform companies such as Google, Apple, and Amazon, the so-called "gatekeeper companies. The main objective is to prevent these companies from using their dominant market position to engage in unfair practices and to achieve a fair digital market for other companies and users.
The GDPR (General Data Protection Regulation), on the other hand, applies to all businesses and organizations and aims to protect personal data and respect privacy. Even small businesses are subject to it as long as they handle personal data within the EU.
In short, the DMA focuses on " fairness of competition in the marketplace " and the GDPR is about protecting " individual rights and privacy. "While the DMA imposes obligations and restrictions on certain large companies, the GDPR requires strict rules for companies of all sizes regarding the handling of personal data. The GDPR requires companies of all sizes to have strict rules regarding the handling of personal data.
Thus, they are complementary in nature, and companies operating within the EU must have a digital strategy that addresses both regulations.
MAJOR ACTS PROHIBITED OR REQUIRED BY THE DMA
The DMA prohibits or mandates the following actions for gatekeepers
Examples of prohibited activities
Preferential treatment of their services (e.g., Google places their services higher in searches)
Prohibit third-party payment methods in apps (e.g., Apple only allows its own payments in the App Store)
Unauthorized use of data obtained from other companies' services (e.g., Amazon's use of a storeowner's sales data)
Examples of obligatory actions
External app store permissions (e.g., iOS)
Interoperation between different messaging applications (e.g., WhatsApp and third-party apps)
Providing performance data to advertisers
Penalties: Severe penalties for violations
One of the distinctive points of the DMA is its very severe penalties.
First violation: fines of up to 10% of global sales
For recidivism: up to 20
Continuing violations: there may be an order to divest the business.
For example, Google's repeated violations of the DMA could result in fines in excess of approximately $3 trillion, or 10% of its annual sales of approximately $300 billion.
Examples of actual applications and company responses
Apple Response
Apple is working onallowing external stores andintroducing external payment methods iniOS, as the monopolistic structure of the App Store may be in violation of the DMA.
Meta Response
Meta introduces "ad-free paid plans "** on **Facebook and Instagram** in the EU to ensure transparency of advertising data. We offer users a choice.
Google Response
Google has announced several changes, including a reorganization of search results and liberalization of app deletion on Android.
What is the impact on Japanese companies and consumers?
Impact on Japanese Companies
Although the DMA is an EU law, it has indirect effects on Japanese companies that provide services to the EU. For example:
DMA-COMPLIANT UI DESIGN IS REQUIRED WHEN PROVIDING APPS FOR THE EU
If an e-commerce site sells through Amazon or Google, the display rankings and other algorithms may change
Consumer Impact
More browser and search engine choices in the EU in the future
Allows acquisition of apps from sources other than the App Store, enabling a freer digital experience
Improved personal data management and transparency for a safe and secure service environment
Future Outlook
The DMA is set to introduce an even stricter monitoring regime and evaluation criteria after 2024. In addition, the world is watching to see when the first case of sanctions under the DMA will be issued.
It is possible that other regions, including Japan, will introduce regulatory laws similar to the DMA in the future, and the EU's influence in international rule-making will grow stronger.
Summary: The Digital Markets Act is a turning point in time.
THE DIGITAL MARKETS ACT (DMA) IS NOT JUST ANOTHER EU LAW, BUT AN INNOVATIVE LEGAL FRAMEWORK THAT CALLS INTO QUESTION THE VERY NATURE OF THE GLOBAL DIGITAL ECONOMY. WITH ITS EMPHASIS ON CORPORATE TRANSPARENCY, FAIRNESS, AND CONSUMER PROTECTION, THE DMA HAS THE POTENTIAL TO BREAK GAFA'S MONOPOLISTIC DOMINANCE.
There is no doubt that Japanese companies and developers will not be able to ignore this trend in the future. The time has come for companies to pay attention to trends in digital market law and reevaluate their strategies.