As the digital landscape continues to evolve, it’s increasingly vital for app developers and tech companies to stay ahead of regulatory changes. The recent approval of the Digital Markets, Competition, and Consumer Act (DMCCA) by the United Kingdom (UK) Parliament just before heading into national elections underscores the urgency and significance of this legislation. Similarly, the European Union’s Digital Markets Act (DMA) has already taken effect and is now in its enforcement phase. Both the DMA and the DMCCA are designed to promote fair competition and protect consumers, but they differ in their reach, implementation methods, and specific provisions.

This update highlights the key similarities and differences between the DMA and the DMCCA to help provide a clear path forward for small and medium-sized enterprises (SMEs) doing business in the EU and UK.

 Key Similarities

Targeting Dominant Platforms

  • DMA: The DMA targets ‘gatekeepers’, which are large online platforms with a significant impact on the internal market, such as Google, Amazon, and Facebook. These platforms must meet specific thresholds related to turnover, user base, and market impact, such as having an annual turnover of at least €7.5 billion in the European Economic Area or a market capitalisation of €75 billion (Article 3 DMA).
  • DMCCA: The DMCCA act targets platforms with ‘Strategic Market Status’ (SMS). Platforms are designated with SMS if they have substantial and entrenched market power in the UK; that is, a turnover exceeding £1 billion or a global turnover exceeding £25 billion as outlined in Part 1 of the DMCCA.

Prohibition on Anti-Competitive Practices

  • DMA: Article 5 prohibits gatekeepers from engaging in practices such as self-preferencing (favouring their own services over competitors) and combining personal data across services without user consent.
  • DMCCA: Equivalent provisions are found in Part 2, where platforms with SMS are required to adhere to a code of conduct that forbids discrimination, guarantees fair trading, and requires transparency.

Enforcement and Penalties

  • DMA: The European Commission is the primary enforcement body, with the power to impose fines of up to 10 per cent of a gatekeeper’s worldwide turnover for non-compliance, as specified in Article 29.
  • DMCCA: The Competition and Markets Authority’s Digital Markets Unit (DMU) enforces the act in the UK, with similar penalty provisions. The DMU is expected to use two new tools: one to prevent harm through tailored conduct requirements and another to implement targeted pro-competition interventions aimed at addressing the root causes of competition issues in digital markets​. Part 3 details that the CMA can impose fines up to 10 per cent of global turnover for breaches of the SMS regime.

Key Differences

Scope and Jurisdiction

  • DMA: The DMA applies across the entire European Union. Its jurisdiction encompasses any company operating within the EU that meets the gatekeeper criteria, regardless of the company’s origin.
  • DMCCA: The DMCCA is specific to the United Kingdom. It targets companies operating within the UK that meet the SMS criteria, focusing on both domestic and international firms with significant UK market presence.

Designating Dominant Platforms:

  • DMA: The DMA designates gatekeepers based on the firm’s overall market position, assessing the company’s influence and presence across the digital market as a whole. The European Commission conducts market investigations and consultations to identify and designate these gatekeepers.
  • DMCCA: Unlike the DMA, the DMCCA focuses on the specific digital activities of a company rather than the company as a whole. The Competition and Markets Authority’s Digital Markets Unit (DMU) evaluates whether a firm meets the SMS criteria based on qualitative and quantitative factors related to specific digital activities linked to the UK. These investigations can take up to nine months and impose tailored conduct requirements on designated firms.

Consumer Protection

  • DMA: The DMA primarily focuses on competition and fair market practices. Consumer protection is implicit in promoting fair competition but is not the primary focus.
  • DMCCA: The DMCCA includes explicit consumer protection measures. Part 4, sections 217-222, mandates transparency in terms of service, stronger rights for redress, and bans on deceptive design practices, like dark patterns.

Specific Obligations

  • DMA: Article 6 includes obligations for gatekeepers, such as ensuring interoperability with third-party services and providing data portability tools for users.
  • DMCCA: Part 2’s code of conduct for SMS platforms includes requirements to treat business partners fairly, ensure non-discrimination, and maintain transparency in business practices.

Tailored vs. Universal Obligations

  • DMA: The DMA imposes a universal set of obligations and prohibitions on all designated gatekeepers. The European Commission can specify measures for compliance but generally applies the same rules across all gatekeepers.
  • DMCCA: The DMCCA provides for individual, bespoke codes of conduct tailored to each SMS firm’s specific circumstances, reflecting a more collaborative approach between the regulator and the firms.

Exemptions

  • DMA: The DMA does not provide exemptions for gatekeepers based on consumer benefit.
  • DMCCA: The DMCCA allows SMS firms to seek exemptions if they can demonstrate that their conduct produces net consumer benefits that outweigh any detrimental impact on competition (Part 1 – Chapter 3).

What to expect moving forward

 The DMCCA offers a more flexible approach compared to the DMA, allowing for tailored codes of conduct and exemptions based on net consumer benefits. This flexibility could foster a more collaborative regulatory environment but also presents challenges in terms of regulatory complexity.

Substantive provisions of the DMCCA will come into force on dates specified by the UK Secretary of State, with different provisions potentially commencing at different times. The App Association is committed to closely monitoring these developments and advocating for the interests of SME app developers in the implementation phase.

Ultimately, understanding and adapting to these regulations is crucial for SMEs to thrive in the evolving digital market landscape, ensuring they can continue to innovate and compete effectively. We will remain actively involved in discussions and regulatory processes to ensure that our members’ voices are heard and that the outcomes benefit the global app economy.