The Digital Markets Act (DMA), is a new EU regulation that aims to improve competitive conditions in digital markets and allow new players to enter the market. In principle, the DMA is aimed at the largest companies in the technology sector. But, as we shall see, in practice it will affect a significant proportion of entrepreneurs active in the digital sphere.
DMA status
The draft regulation was submitted by the European Commission (EC) in late 2020. After negotiations lasting only 15 months, in March this year. EC, the EU Council and the European Parliament concluded work on the regulation. Closing the DMA negotiations was a priority for the French Presidency. An informal deadline for completion was set for the end of March - in time for the French presidential election. Although an agreement was reached at an express pace, we will still have to wait for the adoption and implementation of the regulation. The EP is expected to adopt the legislation during its July plenary session. European Commission Vice President Margrethe Vestager estimates that the legislation will most likely be published in the EU's Official Journal in October. Once officially adopted, there will be a six-month implementation phase. This means that the DMA would not enter into force until early 2023 at the earliest.
Impact on targeted advertising
Although the DMA directly targets the largest technology companies (the so-called access gatekeepers), it will also affect small and medium-sized enterprises that use digital tools in their business operations. Targeted advertising can serve as an example here.
Article 5(a) prohibits the combination of data from different services of the same access gatekeeper, e.g. it prevents the combination of data from search engines and maps without user's consent within the meaning of GDPR. From the user's perspective, the provision will increase the number of pop-ups and thus reduce satisfaction with the quality of digital services. Futhermore, the data combination will lead to a deterioration in the quality of personalised advertising and thus to showing content that is less relevant to a given user's personal interests. Finally, the ban on data combination will lead to separation of services, which until now have formed a whole in the eyes of the user.
At the same time, the changes will affect entrepreneurs who use targeted advertising to sell their products and services. Personalised advertising is relatively cheap compared to traditional forms of mass media advertising. With a small outlay of money, it makes it possible to reach a group of customers potentially interested in buying a particular product. Targeted advertising is therefore particularly important for SMEs and new market entrants.
In the throes of criticism
Despite its numerous business advantages, targeted advertising has come under criticism from groups fighting for the protection of privacy and respect for human rights on the Internet. At one stage, a complete ban on targeted advertising was proposed, which was eventually limited during the trilogues to a ban on targeting using sensitive data and on targeting minors.
The Union of Polish Employers (ZPP) recognises the need to protect privacy and supports all initiatives aimed at increasing the transparency of targeted advertising. However, we believe that imposing a ban not only fails to address the more substantive problems associated with targeted advertising, but also places a disproportionate burden on businesses in the SME sector.
That is why ZPP and 36 organisations from 13 countries sent a joint letter on DMAs, calling on European lawmakers to find the right balance between user protection and value creation. We are glad that policy makers accepted our arguments and decided not to ban targeted advertising in the DMA. Ultimately, the rules on personalised advertising will be further negotiated within the DSA. This is a win-win decision for European entrepreneurs, who can continue to run their businesses unhindered.
In conclusion, the ZPP is convinced that the DMA can benefit European entrepreneurs by levelling the playing field and increasing the competitiveness of the digital market. However, in order to achieve these goals, the provisions of the DMA should be clarified and take into account the needs raised by all stakeholders. The DMA is a regulation that will be in force for years. It is therefore important that its content is well adapted to the socio-economic relations in the EU.
Kamila Sotomska
ZPP Chief Expert on the Digital Economy
