EGDF welcomes the Commission proposal for Digital Markets Act as it will secure fairer competition and more predictable market access for European SMEs in the European Digital Single Market Area.
Especially in mobile game markets, European SMEs rely more and more on usually non-European digital conglomerates. The so-called P2B regulation, which entered into force in 2020, brought much-needed transparency and fairness to the B2B contacts European SMEs have with digital distribution platforms. The proposed Digital Markets Act would go beyond that and bring new rights and predictability also on other core digital services. Furthermore, it would significantly limit the possibilities of gatekeeper platforms to restrict and control the development of digital markets.
The gatekeeper role of very large online platforms is no longer limited solely to digital distribution. Especially on mobile games markets, they play an increasingly important role as providers of networks for advertisement, attribution and analytics services to measure the effectiveness of the advertisement, the operating system for running the game, cloud services for hosting the files, crash analytics, performance measurement tools, hosting services, machine learning tools, database services and authentication and cloud messaging services. Consequently, it is crucial to address their dominant role across the whole digital value chain and ecosystem.
Digital Markets Act is the right tool for the right challenge
One of the main challenges of the European competition law is that its enforcement is hopelessly low. If a major dominant platform forces a competing service provider out from the markets or blocks its access to markets, the competition law investigation can take years. However, the service provider will go bankrupt within a year. Digital Markets Act would solve this by bringing much-needed predictability and trust to digital markets, as European service providers could be sure that their services would not be blocked by competing gatekeeper platforms.
In particular EGDG calls for:
- Article 2 – the definitions: The definition of core platforms services should be widened to cover all digital services provided by companies belonging to a gatekeeper digital corporate group
- Article 5a – an obligation to refrain from combining personal data without end-user consent: EGDF welcomes the fact that Article 5a would force core platforms services in the data value chain to refrain from combining personal data collected from games with other personal data available through their other services
- Article 5b – an obligation to allow business users to offer the same products or services to end-users through third-party platforms: EGDF welcomes this article, as there are still platforms that do not allow game developers or publishers to offer games at lower prices on other platforms.
- Article 5c – an obligation to allow business users to promote offers and conclude contracts with end-users outside the gatekeeper platform: This article would significantly boost the fair competition of payment services in the European digital single market area
- Article 5d – an obligation to refrain from preventing or restricting business users from raising issues with any relevant public authority related to any practice of gatekeepers: It is entirely normal that B2B agreements with platform services include strict non-disclosure and confidentiality agreements. In some cases, they still have clauses that make it unclear whether or not European businesses are allowed to report the malpractices of the platforms to public authorities.
- Article 5e – an obligation to refrain from requiring business users to use identification service of gatekeeper: At the moment, some potential core platform services require game developers to use their identification services. This limits the market access of the competing and European identification services.
- Article 5f – an obligation to refrain from requiring business users to register any other core platform service: Some core platform services are bundling some of their services together with their other services. Consequently, Article 5f should clearly mention that bundling core platform services is not allowed.
- Article 6a – an obligation for core platform services to refrain from using data generated by their competing services on their platform: Article 6c would allow European game publishers to introduce competing application stores in Apple AppStore, for example. When this happens, Apple must not be allowed to use data it collects from these competing application stores to give an unfair competitive advantage for its own services.
- Article 6c – an obligation to allow third-party applications and application stores: At the moment, Apple, for example, does not allow alternative third-party application stores on its platform. This means that European cloud gaming services or European game developers or publishers willing to launch their own application stores cannot directly access Apple’s platform. This is a serious competitive disadvantage for European businesses willing to launch competing services to Apple’s game subscription service, for example.
- Article 6d – an obligation to refrain from ranking the services provided by gatekeeper more favourably than competing services: Some providers of the core platform services are also game publishers. In order to secure fair competition between these gatekeepers and other third-party game publishers, gatekeepers must not be allowed to favour their own games in their search rankings.
- Article 6e – an obligation not to restrict access to applications or services: Apple recently threatened to block the use of the Unreal game engine on its platform to pressure its developer Epic games to stop challenging its contractual terms. In order to ensure that European game developers do accidentally become collateral damage in the legal battles between non-European internet giants by being kicked out from an application store if they use a wrong game engine, it is crucial that this kind of behaviour is explicitly forbidden for providers of core platform services.
- Article 6f – an obligation to treat third party ancillary services equally to the ancillary services run by the gatekeeper: Therefore the Digital Markets Act should force core platform services to allow third-party ancillary services to access their platform with the same conditions as their own services.
- Article 6g – an obligation to allow advertisers and ad publishers to use independent verification services: It is crucial that all services that have reached a gatekeeper role are forced to allow independent verification of their advertisement services.
- Article 6h – an obligation to allow data portability for business users: The new opportunities for European service providers are connected with services that make it possible to give some parts of the services to smaller European operators instead of global ones. This naturally requires strong B2B data portability and interoperability.
- Article 6i – an obligation to provide business users access to aggregated and non-aggregated data generated by those business users to a core platform service: Consequently, the Digital Markets Act should introduce an obligation to disclose the both personal and the non-personal data core platform services are collecting from, for example, games. This would help companies to estimate their data breach risks better.
- Article 6j – an obligation to allow data access for third-party search engines: This requirement should be widened to an obligation allowing third party search engines in gatekeeper application stores.
- Article 6k – an obligation to apply fair and non-discriminatory general conditions of access to application stores: When a core platform service has reached a gatekeeper market position, traders are forced to accept the quickly changing B2B contracts or leave the business. For example, in mobile environments, the developers of mobile applications have no bargaining power towards the distribution platforms
- Article 26 – No penalty race between regulatory silos: The Digital Market Act should follow the example of GDPR and set the maximum penalty level at 4% of global turnover.
The full position paper can be downloaded from here: http://www.egdf.eu/documentation/5-fair-digital-markets/8-how-to-regulate-platforms/digital-markets-act/ or as a pdf from here http://www.egdf.eu/wp-content/uploads/2021/05/202105-EGDF-response-on-the-Digital-Services-Act-package-–-ex-ante-regulatory-instrument-of-very-large-online-platforms-acting-as-gatekeepers-digital-markets-act.pdf