Digital Markets Act (DMA): What You Need to Know

Jan 5, 2024
May 2, 2023

The Digital Markets Act represents a significant move by the EU to regulate the digital economy, aiming to foster fairness, competition, and innovation. While it offers numerous benefits, particularly for smaller businesses and consumers, it also poses challenges and costs, especially for large firms that dominate the digital markets. As with any regulatory framework, the actual impacts of the DMA will become clearer as it is implemented and enforced.

In this article we will describe what the DMA is, its main points, what challenges it brings and how server-side tracking can help.

Why is the EU so prolific with its regulations?

The European Union is known for its rigorous approach to regulations, particularly when it comes to user privacy and data protection on websites. The EU works as a collective of member states, which means that regulations are often designed to be comprehensive and applicable across all member states. This need for uniformity and collaboration among diverse countries leads to detailed and sometimes complex regulations.

There's a strong emphasis on protecting consumers from unfair, deceptive, or abusive practices. The EU views strict regulation as a means to safeguard users against the misuse of their personal data by companies, especially in the digital space.

As technology advances rapidly, the EU continually updates and enforces regulations to address new privacy concerns. This includes tracking cookies, data sharing, and other means of monitoring users online. So companies outside the EU frequently adopt these standards to maintain access to the European market, making EU regulations de facto international standards in many cases.

What is the Digital Markets Act?

The Digital Markets Act (DMA) is a significant piece of legislation passed by the European Union aimed at promoting fair competition and innovation in the digital market, specifically targeting large online platforms referred to as "gatekeepers." These gatekeepers are companies that control data and platform access for numerous users and businesses, essentially dominating the market and potentially engaging in unfair practices. The DMA is part of the broader digital strategy of the EU, alongside the Digital Services Act (DSA).

By preventing gatekeepers from abusing their dominant positions, the DMA aims to ensure a level playing field where smaller players can compete effectively, fostering a more dynamic and competitive marketplace. Reducing the monopolistic tendencies of big tech companies is expected to encourage innovation among all market players, as new entrants and smaller firms will have fairer opportunities to introduce new services and products.

The DMA empowers consumers by ensuring they have more choices and control over their data. It mandates interoperability and data portability, which means users can switch services more easily without losing their data. And the gatekeepers have to be more transparent about their algorithms and data usage practices, which can lead to more trust and a better understanding of digital services by consumers.

About the disadvantages for marketers

Adhering to the DMA may require significant changes in business operations, particularly for large companies identified as gatekeepers. This could involve restructuring, altering algorithms, or changing business models, all of which can be costly. 

Ensuring interoperability and data portability as required by the DMA can add layers of complexity to the technical and operational aspects of digital services, which might be particularly challenging for smaller gatekeepers.

Responsibilities of corporations under the Digital Markets Act

1. The portability of data and ensure interoperability of their services with others. This means users should be able to move their data easily and use services of different companies seamlessly.

2. Gatekeepers are prohibited from ranking their own services or products higher than those of others without a justified reason. This is to prevent them from abusing their dominance to promote their own services unfairly over competitors'.

3. Transparency in advertising services, ensuring that users understand why they are seeing specific ads and who is paying for them. They must also provide advertisers and publishers with the data they need to verify the reach of their advertisements.

4. Gatekeepers should allow and not unfairly restrict the use of third-party software applications or hardware that interact with their own services.

5. It should be notified to the Commission of any intended concentration, such as mergers and acquisitions, that would affect the Digital Single Market, allowing for scrutiny of potential market impacts.

6. Corporations are expected to conduct regular audits to ensure compliance with the rules set out in the DMA. They must also report these findings to the relevant authorities.

Consequences of Non-Adherence to the DMA

The EU has established a robust enforcement mechanism to ensure compliance, and the penalties for non-compliance are substantial to reflect the seriousness with which the EU treats these matters. Here are the primary consequences for non-adherence:

  • Financial penalties. Companies found in breach of the DMA can be fined up to 10% of their total worldwide annual turnover for the preceding financial year. For repeated infringements, this can increase up to 20%.
  • Companies that systematically fail to comply, the Commission can impose behavioral or, in certain extreme cases, structural remedies. This could mean changes to the way the business operates or even breaking up the company in severe, repeated cases of non-compliance.
  • Companies may be excluded from public procurement processes and state aid in the EU, which can have significant financial and reputational impacts.
  • Restrictions or additional scrutiny in market access, affecting the company's ability to operate freely within the EU.

How server-side tracking can help comply with DMA

Server-side tracking, especially when integrated with Google Consent Mode V2, helps ensure compliance with DMA by providing more control over data flow and reducing reliance on client-side mechanisms. 

However, it’s crucial to note that server-side tracking doesn't exempt the need for user consent. Adhering to regulations, you must configure consent mode, pass user consent from web to server-side, and set up server-side tags to respect users' consent state. You can make your website more resilient and accurate for data collection that is compliant with user consents.

In addition to ensuring compliance with user consents, server-side tracking offers a more secure and controlled environment for handling data. By processing data on the server, it minimizes the risk of data leakage or unauthorized access compared to client-side tracking. This way, you can ensure data is handled and processed in line with the privacy preferences of users, which is a fundamental aspect of adhering to regulations like the DMA. 

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The Digital Markets Act represents a shift in digital marketing, emphasizing fair competition, transparency, and consumer protection. While it has challenges in terms of compliance and may restrict certain business practices, it also provides a more level playing field and encourages innovation. 

The DMA's impact leads to a healthier digital ecosystem where consumer rights are protected and businesses of all sizes have the opportunity to thrive. Integrating server-side tracking offers a robust compliance solution, ensuring data privacy and control. This synergy between regulation and technology ultimately leads to a more trustworthy digital environment.

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