The new European Digital Markets Act which aims to rein in Big Tech may enter into force by the end of the year after the EU institutions reached an agreement on Thursday on the final text of the bill.
While most of the debate has focused on the definition of gatekeepers — Big Tech firms that meet certain size and revenue thresholds (i.e. Meta, Google, Apple, Amazon, Microsoft) — little attention has been paid to the concept of “emerging gatekeepers.”
Yet this concept may gain relevance as the digital space evolves and companies’ presence in Europe grows. This subcategory of gatekeepers may be the perfect solution for regulators to monitor the market and impose gradual obligations on companies as they become more important in their core platform services.
But first, what is a gatekeeper? According to the DMA, a provider of a core platform service shall be a gatekeeper if it meets three conditions. It must have significant impact on the internal market, defined by an annual turnover of at least €7.5 billion within the European Union (EU) in the past three years or a market valuation of at least €75 billion. It must also serve as an important gateway for business users, which is met if the company has 45 million monthly end users and at least 10,000 business users established in the EU. Lastly, it must enjoy an entrenched and durable position in its operations or will enjoy such position in the future, quantified as 45 million monthly end users for at least three years.
The last prong of this trident, “will enjoy an entrenched and durable position in the near future,” is rather vague, but it would allow the European Commission to follow companies that are growing fast and impose measures before that position becomes more permanent. The Commission may use this concept as a traffic light to modulate the obligations a company should face when it is on track to become a gatekeeper.
The original draft of the DMA doesn’t contain a specific definition of “emerging gatekeeper,” but the introduction provides a good understanding of the purpose of this term.
“For gatekeepers that have been designated by the Commission as likely to enjoy an entrenched and durable position in the near future, the Commission should only impose those obligations that are necessary and appropriate to prevent that the gatekeeper concerned achieves an entrenched and durable position in its operations. With respect to such emerging gatekeepers, the Commission should take into account that this status is in principle of a temporary nature, and it should therefore be decided at a given moment whether such a provider of core platform services should be subjected to the full set of gatekeeper obligations because it has acquired an entrenched and durable position, or conditions for designation are ultimately not met and therefore all previously imposed obligations should be waived.”
Therefore, the Commission seems to have an important tool to avoid companies circumventing the rules if they don’t fully meet the quantitative criteria set in the law. For instance, if a company doesn’t meet the users thresholds but it is controlling a core platform service, may be subject to some of the gatekeeper obligations.
According to a press release from the Council, the latest agreement will include in the text of the law a new category of “emerging gatekeeper,” and it may offer more information about when a company may have this status, rather than leaving this definition completely at the discretion of the European Commission.
The real question is, who may be an “emerging gatekeeper”? For instance, companies that are competing with Big Tech but are not yet at the same level, like TikTok, whose revenue and user base don’t meet the gatekeeper criteria — or Booking.com, which may just be near the limit to qualify as gatekeeper.