What importance does the EU’s proposal for the Digital Markets Act have for democracy? Alexandru Circiumaru, EPD’s former Digital Policy Officer, explores the topic in this article.
The European Commission’s work to establish Europe’s digital decade is well under way. After the Digital Strategy and the White Paper on AI, in December 2020 the Commission published its proposal for the ‘Digital Services Act’ (DSA), as well as the proposal for the ‘Digital Markets Act (DMA). In broad terms, the DMA seeks to regulate the behaviour of big online platforms (called ‘gatekeepers’) so as to ensure that the markets in which they operate remain fair and competitive. To this end, the DMA gives the Commission powers to carry out market investigations in order to identify gatekeepers and impose remedies where their behaviour breaches one of the obligations provided in the Act.
While the DSA has received a lot of attention from civil society, so far, few attempts have been made to assess the impact of the DMA on democracy. In order to do this, three specific issues should be considered: (1) popular control; (2) ‘on-line self-determination’ and digital sovereignty; and (3) competition and choice. While this list is not exhaustive, it presents some of the most important areas of interplay between the scope of the DMA and core tenets of modern democracy.
1. Popular control
It is a fundamental principle of democracies that power should reside in the hands of the people. A ramification of this principle is the idea that the people could have at least some control over what is happening to them. The digital age highlights the existing gaps in the legal framework of various states that certain market players have taken advantage of to entrench their dominant position and increase their profits. Under the current framework, authorities have limited tools to address these issues, as the competition rules in place have been adopted before the emergence of the digital economy. In practice, this means that major digital companies like Google can behave in ways that impact millions of people without an effective accountability and oversight mechanism in place.
The DMA seeks to bring the behaviour of gatekeeper platforms under the oversight of a public authority. It provides a number of positive (things that must be done) and negative obligations (things which cannot be done), and gives the power to the Commission to intervene and impose remedies as well as penalties of up to 10% of the company’s total worldwide annual turnover. Through public institutions, the DMA has the potential to bring the behaviour of gatekeepers within the control of elected representatives, by providing clear obligations about what gatekeepers are and are not allowed to do.
2. Online self-determination and digital sovereignty
As digital technologies are taking over the world, it is increasingly important to safeguard the rights of internet users, including what is happening to their data. The term ‘online self-determination’ is here used to express the idea of control of an internet and internet-based services user over the way in which they use these tools, and the consequences this has. Similarly, at the state level, the need for ‘digital sovereignty’ is becoming increasingly important. In the words of the Commission, digital sovereignty means that the EU will be able to set its own standards rather than follow the standards of others. While on the face of it this can be seen as a state-level issue, the nature of the digital age is such that non-state actors have an important role in setting rules and influencing standards. Both the online self-determination of citizens and the digital sovereignty of states relate closely to the need for popular and institutional control, and the exercise of fundamental freedoms – essential components for democracy.
The DMA has the potential to increase the online self-determination of citizens by giving them more of a say on the choices that gatekeepers make in their name. Examples include prohibiting gatekeepers from automatically signing in users to other services (logging into Gmail would not also automatically log one into Youtube), banning gatekeepers from requiring end-users to sign up for ancillary services, or allowing data-portability for individual users. While not all users will be interested in any of these new options, the idea behind them is that they will be able to choose rather than have their choice made for them in the way which is most profitable for the gatekeepers.
In terms of digital sovereignty, the DMA will address a number of behaviours which have so far been in a sort of limbo, which competition law has tried to penetrate, sometimes successfully, other times less so. Despite successful examples such as the case of the German National Competition Authority against Facebook, which prohibited this company from combining user data from different sources, a stronger legal basis is necessary. The DMA would give the EU the possibility to set its own standards, rather than following the ones imposed by certain companies, which have reached levels of power that enable them to make decisions otherwise available only to democratic institutions.
3. Competition and Choice
The idea of choice is important for competition law in general and for the DMA in particular. The goals of EU competition policy are beyond the scope of this piece, but it seems quite clear and uncontroversial that giving consumers the ability to choose plays an important role. The idea behind the New Competition Tool, some remainders of which are now in the DMA, was to prevent certain companies from becoming virtually invulnerable in certain markets – due not only to their market power, but also to the high barriers that others players had to face to enter the market.
The DMA is a meaningful tool to ensure the protection of fair markets and consumer welfare. These have been essential features of today’s system of democratic governance in Europe, which are especially vulnerable in the digital age. The DMA could play an important role in ensuring that platforms do not become “too big to control” and acquire a level of power over the markets, and ultimately over their customers and consumers, that could threaten democratic checks and balances and citizens’ digital rights.
In light of the above, conversations on the DMA’s impact on democracy are both warranted and necessary. It is therefore important for CSOs to take a stand and participate in such discussions. A positive development in this sense is a letter drafted by ARTICLE 19 and signed by a number of other organisations asking the Commission, among others, to focus more on individual users.
The DMA has therefore a potentially important impact on democracy, as it directly seeks to remedy the troubling power shift, from the hands of citizens, seen as consumers or innovators, as well as from public institutions, to a handful of private companies. While arguments can be made about its shortcomings, in particular its limited direct importance for end-users, the DMA is an important step in ensuring that democracy evolves in line with technology, bringing us one step closer to a ‘democracy fit for the digital age’.