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DMA: IMCO targets GAFAM, forgets interoperability

We’ve seen the draft report on the Digital Markets Act from the leading Committee, and we are not impressed. Rapporteur Andreas Schwab imagines the DMA as a tool to take swift action against the biggest players in online markets. But the key issues that could help consumers, about whom the Committee for Internal Market and Consumer Protection should be most concerned, remain unresolved.

The usual suspects

The German Christian-Democrat MEP’s vision of the DMA targets the biggest platforms, by raising quantitative thresholds of how rich and popular one has to be to qualify as a gatekeeper. A quick check of whose annual EEA turnover is €10 billion in the last three financial years or market capitalisation is at least €100 billion in the last financial year, and which services have over 45 million monthly users, reveals that Schwab is targeting the GAFAM (Google, Apple, Facebook Amazon, Microsoft).

The rumour in town is that platforms such as booking.com don’t want to be bound by the same regulatory measures as the giants that are bigger and wealthier by an order of magnitude, and… that originate from the US. This could be considered beneficial, if one views only the five to be the source of most online evils. Except that it is not entirely future-proof if a new core service emerges and does a lot of damage before they actually reach the high financial thresholds. Not to mention that such an approach further entrenches the online ecosystem in which online intermediation is practically divided among the five companies. 

The forgotten pieces

The IMCO report leaked a few days before its official publication and that early version included a solution of tailor made-remedies that the European Commission could impose on a case-by-case basis and that ranged from behavioural to structural measures. According to the leak, the European Commission would be able to divide a service that notoriously breaches the provisions of DMA. In addition, the regulator would be able to impose interoperability or access to API. Disappointingly, these provisions didn’t make it to the official version of the IMCO draft report. 

Both the European Commission’s and IMCO versions miss an important point that could make market investigations better: a possibility to include interested third parties into hearings, proceedings and gathering of evidence of volatile behaviour of gatekeepers. Business actors, consumer organisations, and civil society alike have a lot of research and practical experience that could contribute meaningfully to the investigations and help achieve a fairer and better balanced assessment of the situation of a gatekeeper. A lack of such a possibility will limit the effectiveness of the regulation.

It ain’t over until the Shadows sing

The MEPs at IMCO have the time until July 1st to table amendments to the draft report. Then the group of Shadow Rapporteurs (representatives of all political groups at the Committee) will deliberate what to make out of these proposed revisions. It may take weeks or it may take months, but one thing is for sure: the time to discuss how to make DMA substantially better for consumers – or end users, as the proposed act refers to humans on the internet – is now. 

Interoperability is obviously a can of worms: a possibility to connect different services raises important questions around data protection and meaningful consent – especially that given by “friends”, the people who a person wanting to connect to an existing service from a different one is exchanging content and data with. There is also a possibility that the incumbents that open up to become interoperable with each other and with any new services will impose their technological standards and effectuate control over the internet in that way. Finally, there are heaps of technological questions to solve for both those that are now making money in their walled gardens and those that will want to build bridges between services. 

“At the end of the day the casino always wins, and the same goes for gatekeepers: we let them be so strong and rich that it is easier for them than for their wannabe-competitors to shoulder new regulatory burdens.”

Breaking down the “interoperability is too difficult to design” myth

The data protection and consent issues are not new questions – in fact the General Data Protection Regulation parses it out for data portability. Moreover, the DMA proposal itself brings it as a requirement in art. 6(h): gatekeepers should provide tools for end users to facilitate the exercise of data portability, including by the provision of continuous and real-time access. This is a good start to build interpretations, arguments and finally legislative wording, which would ensure a good balance between the rights; one being a user’s right to connect through a provider of her choice and the other being a right to decide if our content and data should be visible through third-party services our “friends” choose to use. 

The potential imposing of technological standards by the gatekeepers to others is not to be underestimated. At the same time, such a danger is the symptom of a “casino situation” that we are now in. At the end of the day the casino always wins, and the same goes for gatekeepers: we let them be so strong and rich that it is easier for them than for their wannabe-competitors to shoulder new  regulatory burdens. 

In the case of interoperability, perhaps imposing technological standards would be the initial effect. But that is why there are other remedies in the DMA to be used if that proliferation of technology further entrenches the gatekeepers. We simply have to start somewhere and at least  the end users would experience a tangible benefit.

“Gatekeepers have proven time and time again that they can pour enough money and talent on any problem to solve it. All the rumination and energy that goes into creative attention capture techniques could be redirected into bridging services with one another.”

Technological problems can also be solved in time – after all it is the gatekeepers who have proven time and time again that they can pour enough money and talent on any problem to solve it. All the rumination and energy that goes into creative attention capture techniques could be redirected into bridging services with one another. 

After all many of them are interoperable internally already, and as Dr Ian Brown remarked during an event on DMA and end users organised by Body of European Regulators for Electronic Communications, it is the discretionary choice of platforms to not open up more. For example, Instagram is already interoperable with Facebook, and Facebook plans to make the messaging services that it owns interoperable (Messenger, WhatsApp and Instagram’s direct messaging tool). So, contrary to what we are used to thinking, gatekeepers-to-be are seeing the benefits of interoperability beyond what they are ready to admit. 

Let’s hope that the Rapporteurs will be more adventurous this time around as they are negotiating the Committee’s amendments to the DMA report.