What is it and what does it mean for the likes of Google, Amazon and Facebook?
Following a major shake-up back in 2018 and the introduction of the General Data Protection Regulation (GDPR) that forced all companies to look at how they collect and managed data, the EU are flexing their mighty muscle again with the Digital Markets Act.
Due to take effect in 2023, the act is aimed at so called ‘gatekeeper’ firms. As the names suggests, those companies that dominate and in many cases restrict competition online. The gatekeeper firms amongst others are the likes of Google, Facebook, Amazon and Apple.
Last week, Margrethe Vestager, the EU’s antitrust chief, got backing in the European Parliament to press ahead with the act.
What’s in the Act?
The main areas of the act deal with what the EU regard as anticompetitive practices. It will force the tech companies to change some of their business models to stop what is perceived as creating a monopoly that restricts other players into the market.
The act will have a list of what is acceptable and what cannot be allowed once the bill has been passed and the act becomes law in the EU parliament.
The Act is aimed at large firms, those with a market value of 75 billion euro ($82.4 billion) or 7.5 billion euro ($8.26 billion) in annual revenue within the EU, and at least 45 million monthly end-users and 10,000 yearly business users of at least one core platform.
What is the impact on marketing?
Under the act, Alphabet, the parent of Google, will be restricted to serving ads across multiple platforms, with data that has been collected by any user moving between Google’s different services e.g. somebody who is using YouTube and then goes on Google Search, without having explicit consent from the user.
As the Google example above, Meta, the parent of Facebook will not be able to serve ads to a Facebook user who then opens up and starts using Instagram or WhatsApp or any of the company’s brands.
Poor old Amazon is already involved in a legal battle with the EU with an antitrust case. It is also inversing revenues through its own paid search. But under its core ecommerce business, under the act it will be stopped form using data obtained from outside sellers and offering customers competing or alternative products.
Apple has been grappling with the EU also over its App Store. The company will have to allow alternatives to its App Store for downloading apps, which many believe is already a monopoly. Apple will also have to allow alternative payment methods other than its own on the App. Currently Apple takes a 30% fee on each transaction.
What happens next
Given all the furore before the act comes into place and legal battles going back and forth, it seems that the act will go ahead and the finer details may be tweaked as the bemouth of the internet flex their own muscle and argue their case, as is their right to do so.
The bigger concern for advertisers and those that advise them, is what strategy will be deployed to keep front of mind of existing and new customers.
What is clear, is that costs that are incurred by the platforms, will no doubt be past on to the advertisers.
More details of the act can be found here – https://ec.europa.eu/competition-policy/sectors/ict/dma_en
If you would like to learn more about the Digital Markets Act or how it may impact on your marketing, please contact Reggie James at Digital Clarity.