European Union: How the European Commission is leading the charge in digital market regulation

In summary

This article summarises recent developments in antitrust enforcement in digital markets in the European Union with a focus on actions by the European Commission while mentioning key cases at the member state level. It covers traditional antitrust rules (abuse of dominance, agreements and merger review) as well as the Digital Markets Act (DMA) and its member state analogues. It also discusses issues related to artificial intelligence and the metaverse.

---

Discussion points

• Key abuse of dominance cases in digital markets
• Competition concerns relating to agreements in digital markets
• Key recent European Union competition enforcement actions in digital markets
• Enforcement of the Digital Markets Act, and its national analogues
• Competition issues relating to generative artificial intelligence and virtual worlds

---

Referenced in this article

• Adobe/Figma
• Amazon/iRobot
• Booking Holdings/eTraveli
• Digital Markets Act
• EC investigations into Apple
• EC investigation into Google Adtech
• EC investigation into Microsoft Teams
• Illumina/GRAIL
• Microsoft/Activision

Introduction

The European Union continues to be at the forefront of enforcement and regulation in digital markets. Since the start of 2023, it has implemented the world’s first ex ante competition regulation in the digital sector, the Digital Markets Act (DMA), and opened the first investigations into suspected non-compliance with it. In parallel, the European Commission (EC) and competition agencies of several EU member states have continued active enforcement of traditional competition rules, pushing ambitious investigations into the conduct of major digital platforms and closely scrutinising digital mergers, while beginning to actively probe competition issues in frontiers such as generative artificial intelligence (AI) and virtual worlds (ie, the metaverse).

This article summarises the key developments in this area, with a focus on the EC and its enforcement actions. It is structured as follows: the first section covers abuse of dominance and agreements/concerted practices, the second delves into digital mergers, while the third focuses on the DMA and its analogues at the national level. The last section discusses the most recent competition developments in the areas of generative AI and metaverse.

With the European Union’s approach continuing to influence competition regimes around the world, keeping abreast of developments in the European Union is vital for both EU competition law practitioners and competition professionals in other jurisdictions.^[1]

Abuse of dominance and agreements and concerted practices

Abuse of dominance 

Since January 2023, big tech platforms have continued to be a key enforcement priority for the EC, national competition agencies in the European Union^[2] and across the globe.^[3]

The EC progressed investigations targeting alleged abuses of dominance by major tech companies, including Alphabet,^[4] Amazon,^[5] Apple,^[6] Meta^[7] and Microsoft.^[8] These investigations cover a variety of practices, ranging from the use of data, algorithms, technology and platform rules, to tying and self-preferencing. Apart from showing continued willingness to accept commitments in tech cases,^[9] the EC has also broken a new path by relying on exploitative theories of harm when pursuing conduct in digital markets.^[10]

App Store investigations

In March 2024, the EC fined Apple €1.84 billion^[11] for abusing its dominance on the market for the distribution of music streaming apps to iPhone and iPad users by restricting app developers from informing users about alternative and cheaper music subscription services available outside of the app (anti-steering provisions). Such restrictions were considered by the EC as neither necessary nor proportionate for the protection of Apple’s commercial interests and having caused both monetary (ie, higher prices for music subscriptions) and non-monetary (ie, degraded user experience) harm to iPhone and iPad users.

While the EC’s 2021 statement of objections focused also on Apple’s conduct requiring app developers to use Apple’s own in-app purchase system, which includes a commission fee of up to 30 per cent on transactions, the EC subsequently narrowed its investigation to anti-steering only.^[12]

Notably, the EC found Apple’s anti-steering provisions to amount to unfair trading conditions, which is an exploitative form of abuse of dominance prohibited by article 102(a) of the Treaty on the Functioning of the European Union (TFEU). Apple lodged an appeal seeking to overturn the decision on 16 May 2024.

The decision shows the EC’s renewed willingness to pursue exploitative theories of harm even outside excessive pricing cases in the pharmaceutical sector. As noted by a senior EC official at a recent conference, exploitative abuses are no longer the ‘unloved child’ of EU antitrust enforcement.^[13] In particular, exploitative cases require that the EC show consumer harm, but not competitor foreclosure, which was arguably harder to show in this case.

Mobile wallet investigations

January 2024 saw a major milestone in another investigation into Apple’s practices that began in 2020,^[14] with an announcement that Apple had offered behavioural commitments to resolve the EC’s investigation into its Apple Pay payments solution. The EC’s statement of objections issued in 2022 accused Apple of abusing its dominant position in European markets for mobile wallets on Apple’s iOS devices by preventing developers of competing mobile wallets apps from accessing the necessary hardware and software (near-field communication (NFC)) input on Apple devices, thereby favouring its own payments solution, Apple Pay.^[15] Apple’s proposed commitments would allow third-party mobile wallet and payment service providers to access and interoperate with the NFC functionality on iOS devices free of charge.^[16] The EC is currently assessing and market testing Apple’s proposed commitments.^[17]

Tying investigations

On 27 July 2023, the EC formally launched an investigation into Microsoft’s alleged anticompetitive tying of its videoconferencing solution, Teams, with its Office 365 and Microsoft 365 suites. The EC is also investigating potential restrictions to the integration and interoperability with third-party products, and competing video conferencing solutions in particular.^[18] On 31 August 2023, Microsoft announced that starting 1 October 2023 in the European Union, it would offer existing business customers the possibility to license its software packages without Teams at a reduced price, and that new business customers would be offered a separate licence for Teams.^[19] Microsoft also announced enhanced resources for interoperability with Microsoft 365 and Office 365. On 1 April 2024, Microsoft made this August 2023 package global, subject to a few tweaks.^[20] Microsoft’s announcement received intense criticism, for instance because existing enterprise customers might have little financial incentive to switch to Teams’ competing products given the low-price delta.^[21] Public sources suggest that the EC is currently working on a statement of objections.^[22]

The EC is also investigating Meta’s alleged abuse of dominance in the markets for online classified ads, by, inter alia, tying its online classified ads service, Facebook Marketplace, to its personal social network, Facebook.^[23]

Tying practices in digital markets are in the regulatory crosshairs across the globe with many competition agencies, both within^[24] and outside the European Union,^[25] investigating them.

Self-preferencing investigations

Self-preferencing practices are another key enforcement priority for the EC. They can take various forms, such as preferential ranking or more prominent display in search results pages,^[26] privileged access to data,^[27] preferential treatment of customers that use an adjacent first-party product^[28] and preferential access to platform features.^[29]

In its 22 December 2022 statement of objections addressed to Meta, the EC alleged that Meta imposed unfair trading conditions on Facebook Marketplace’s competitors to favour its own product.^[30] The EC raised concerns that Meta might gather and process ads-related data from competitors that are not necessary for the provision of its online display advertising services, but would benefit its Facebook Marketplace.

On 14 June 2023, the EC sent a statement of objections to Google over alleged self-preferencing practices. In particular, Google is alleged to have favoured its own online display advertising technology services over those of competing providers, advertisers and online publishers. The EC mentioned that it is exploring structural remedies such as a divestment by Google of part of its ad technology services.^[31]

Privacy-related competition investigations

In a landmark judgment issued on 4 July 2023, the European Union’s highest court, the European Court of Justice (ECJ), ruled that competition authorities may consider a company’s compliance with the European Union’s data protection rules when assessing whether it abused its dominant position.^[32] While the ECJ judgment allows competition agencies to assess breaches of the EU’s General Data Protection Regulation (GDPR) as part of a competition investigation, these agencies are not compelled to do so. For example, in instances where privacy practices are the only form of abuse assessed by a competition agency, the ECJ noted that it may be more appropriate for the issue to be resolved by a sectoral regulatory agency (eg, a data protection authority (DPA)) and emphasised certain measures to ensure consistent application of the GDPR.^[33]

Interim measures

As it stands, the use of interim measures by the EC is limited to cases of ‘urgency’ owing to the risk of ‘serious and irreparable damage to competition’, and on the basis of a prima facie finding of infringement.^[34] To date, the EC has adopted interim measures only very rarely in conduct cases,^[35] most recently against Broadcom with respect to exclusivity requirements on purchasers of its chipsets.^[36] However, it is currently revising its procedural rulebook and is exploring the possibility to soften the legal standard for the adoption of interim measures.^[37] Some national competition agencies have more permissive procedural rules in place and have recently made use of these in digital markets investigations.^[38] EC officials have also made references to the potential suitability of interim measures in fast-moving markets such as generative AI.^[39]

Abuse of relative market power

In some EU^[40] and ex-EU^[41] jurisdictions, competition authorities can take enforcement action against companies that are not in a dominant position, but are alleged to be abusing their ‘relative market power.’^[42] For instance, in 2020 the French Competition Authority (FCA) fined Apple and two wholesalers for abusing its position towards ‘premium’ independent resellers of Apple products that were economically dependent on them.^[43]

Revised guidance on exclusionary abuses of dominance

In parallel with its increased enforcement activity, the EC recently revised its 2008 guidance paper on exclusionary abuses of dominance,^[44] and announced its intention to adopt new guidelines on abuse of dominance by 2025.^[45]

The revisions to the guidance paper reflect the EC’s understanding of the ECJ’s case law since 2008. They generally lower the applicable standards for assessment and include changes or clarifications of:

• the notion of foreclosure, which now also covers ‘conduct that weakens an effective competitive structure without necessarily leading to the full exclusion or marginalization of competitors’;^[46]
• the relevance of not as efficient competitors in pricing abuses, where the EC recognised that: ‘in certain circumstances a less efficient competitor may also exert a constraint which should be taken into account when considering whether particular price-based conduct leads to anti-competitive foreclosure that while in pricing abuses EC will intervene may intervene even if of the relevance of as efficient competitors’;^[47]
• the as efficient competitor price cost test, which the EC considers as optional in pricing abuses;
• test for constructive refusal to deal and unfair access conditions, where indispensability is not seen as part of the relevant legal test; and
• margin squeeze, which is seen as a separate form of abuse.

Agreements and concerted practices

Another possible competition concern in digital markets relates to coordinated conduct via digital tools such as algorithms. This can typically take the form of: an explicit collusion facilitated by pricing algorithms capable of detecting and responding to deviations; a ‘hub-and-spoke’ scenario in which competing firms use the same pricing algorithm to drive their pricing decisions; and tacit collusion via a pricing algorithm unilaterally designed and implemented by each competitor, but that facilitates alignment of their market behaviours.^[48]

While European competition agencies have repeatedly raised concerns with respect to these three types of collusion,^[49] actual cases remain rare in practice.

In contrast, US competition agencies have taken first steps in this area, with the US Department of Justice (DOJ) opening a criminal investigation into the use of RealPage’s rental pricing recommendation software by large residential property owners and management firms in March 2024.^[50] This follows the DOJ’s filing of a joint amicus brief with the Federal Trade Commission (FTC) in the pending civil suit against RealPage, arguing that the use of an algorithm to collude on prices raise competition concerns regardless of the industry at stake.^[51]

Considering the proliferation of pricing recommendation tools and EU law on concerted practices and information sharing, it may only be a question of time before we see active EU enforcement in this area.^[52]

Digital mergers

The merger control landscape in Europe is marked by increasingly interventionist and aggressive enforcement both in the European Union and in the United Kingdom, adding uncertainty to global dealmaking.^[53] Competition agencies are focusing on ‘killer acquisitions,’ where incumbent firms acquire particularly innovative targets or nascent or potential rivals. They are also increasingly assessing non-traditional factors, such as non-price harms (quality, innovation), and non-horizontal or ecosystem theories of harm. A key new – though controversial – tool in the EC’s toolkit for digital mergers is its revised policy on article 22 of the EU Merger Regulation (EUMR); since then, it has only been used in three instances, and not specific to the digital sector (Illumina/Grail, Qualcomm/Autotalks and EEX/Nasdaq). The digital mergers addressed in this section were notified to the EC through traditional means, arguably underlining that the existing mechanisms were fit for purpose. A March 2023 ECJ judgment, Towercast, also allows national regulators to subject closed transactions to ex post review under abuse of dominance rules.^[54] At a national level, Germany and Austria introduced transaction value thresholds in 2017 to address a perceived enforcement gap against potential killer acquisitions, primarily in the digital and pharmaceutical sectors.

The past year saw high-profile challenges to transactions in digital markets:

• Adobe/Figma: in December 2023, the parties announced that they had mutually agreed to terminate their agreement for Adobe’s planned US$20 billion acquisition of Figma.^[55] This followed a statement of objections from the EC^[56] in November 2023 and similar concerns from the CMA.^[57] The EC was concerned that the transaction could have anticompetitive effects in interactive product-design tools, and in particular that it would prevent Figma from contesting Adobe’s position for digital asset-creation tools. The EC specifically called out concerns around a reverse killer acquisition (whereby Adobe would discontinue its competing design tool).
• Microsoft/Activision: Microsoft closed its US$69 billion acquisition of video game company Activision Blizzard on 13 October 2023, following approval from the CMA and ending a 20-month contentious regulatory process. It is the industry’s largest deal to date^[58] and faced opposition in many jurisdictions, notably the European Union, the United Kingdom and the United States.^[59] In the European Union, the EC approved the deal based on licensing remedies in April 2023.^[60] In contrast, on 26 April 2023, the CMA rejected the remedies and blocked the deal over concerns that it ‘would alter the future of the fast-growing cloud gaming market’.^[61] Microsoft appealed the CMA’s veto but ultimately submitted a ‘restructured’ deal to the CMA for a fresh Phase I review, in an unprecedented move. This entailed divesting Activision’s cloud gaming rights outside the European Economic Area (EEA) to French publisher Ubisoft, and receiving a non-exclusive license back in return. Clearance was received from the CMA on 13 October 2023.^[62] At the time of writing, the saga continues in the United States where the FTC is currently still litigating to block the deal.^[63]
• Booking/eTraveli: on 25 September 2023, the EC prohibited Booking Holdings’ proposed €1.6 billion takeover of Swedish online flight booking provider eTraveli.^[64] The EC held that the deal would have strengthened Booking’s dominant position on the market for hotel online travel agencies (OTAs), allowed it to leverage eTraveli’s capabilities to become the main flight OTA in Europe, and allowed it to expand its travel services ecosystem. The EC rejected as insufficient the ‘choice screen’ remedies that Booking had offered.^[65] The prohibition is the first EC decision based on an ‘ecosystem’ theory of harm, showing the European agencies’ push for new theories of harm in the digital sector. It is also the first not based on the EC’s horizontal or non-horizontal merger guidelines, but instead relying directly on the EUMR (under which the strengthening of a dominant position is an example of a significant impediment to effective competition, the test for prohibition). Booking appealed the decision, stating that it ‘departs from settled law and precedent.’^[66]
• Amazon/iRobot: on 29 January 2024, Amazon and iRobot, a maker of robot vacuum cleaners (RVC), announced that they were abandoning their proposed transaction due to regulator opposition.^[67] The EC had issued a statement of objections on 27 November 2023, and signalled in mid-January that it intended to block the deal.^[68] The EC expressed concerns that Amazon could be incentivised to foreclose rival robot vacuum cleaners manufacturers from Amazon’s online marketplace after the transaction. The parties chose to terminate the deal rather than offer commitments to the EC.

EC’s focus on killer acquisitions: article 22 referrals and the Illumina saga

In March 2021, the EC published guidance on its revised policy for the article 22 referral mechanism, welcoming referrals from national competition agencies regardless of whether national or EC thresholds are met.^[69] In terms of referral priorities, the EC specifically flagged access to larger data sets in digital sectors, as well as transactions involving innovative companies with active research and development (R&D) projects. It outlined that below-threshold deals may be appropriate for referral where the turnover of one of the companies ‘does not reflect its actual or future competitive potential’ or where the transaction value is particularly high relative to the target’s turnover. The EC’s policy reversal (it had previously discouraged referrals absent jurisdiction) was viewed in some corners as an indirect attempt to ‘legislate’ for expanded jurisdiction, stretching the mechanism significantly beyond its original purpose in a bid to close a perceived enforcement gap and tackle killer acquisitions.

Just one month after the launch of the revised policy, the EC accepted a below-threshold article 22 referral of the Illumina/GRAIL deal from France, and requested to join that referral from several other member states. Even though GRAIL had no EU turnover, the EC accepted the referral based on the cross-border impact of the deal and the fact that GRAIL had competitive significance beyond its immediate sales. Both the FTC in the United States and the EC challenged the deal, focusing on concerns that Illumina would have the ability and incentive to prevent rivals from developing multi-cancer early detection tests, a product that at that point only GRAIL had released commercially and for which its systems were a necessary input.

Despite the pending challenges, Illumina announced in August 2021 that it had completed the acquisition. The EC imposed (for the first time) interim hold separate measures for the rest of its review, and subsequently prohibited the transaction. It later fined Illumina a record €432 million for implementing the transaction without prior EC approval and imposed a symbolic fine of €1,000 on GRAIL – the first time a gun-jumping fine was levied against a target company. The EC ordered Illumina to divest GRAIL in October 2023.^[70]

Shortly after the referral in 2021, the companies brought an action for annulment of the EC decisions to accept the member states’ referral requests. The General Court of the EU (GC) dismissed the action, supporting the EC’s interpretation of the article 22 referral mechanism. The parties appealed to the European Union’s highest court, the ECJ. On 21 March 2024, an adviser to the ECJ, Advocate General Emiliou, proposed setting aside the judgment of the lower court in Illumina v Commission. An ECJ ruling can be expected before the end of 2024 and may see a return to legal certainty in Europe for dealmakers.

DMA and mergers and acquisitions (M&A)

The DMA will also lead to a greater focus on digital mergers. Gatekeepers will need to inform the EC (pre-closing) of any M&A transaction where one of the parties provides a core platform service (CPS) or any other services in the digital sector or that enable data collection, regardless of whether it is notifiable due to meeting the merger thresholds or not.^[71] The EC will be entitled to temporarily block further M&A activity by a gatekeeper in cases of systematic non-compliance with the DMA. The United Kingdom is considering a similar requirement in its proposed digital markets regime.

There was an expectation that article 14 of the DMA would be used in conjunction with article 22 EUMR, ensuring a continuous stream of information on transactions by large platforms to both the EC and national regulators, who would also be notified.^[72] These transactions could be candidates for a referral to the EC by national regulators – ensuring the EC had an effective mechanism to take jurisdiction over any digital transaction referred to it, regardless of thresholds (for now). If the ECJ rules against the EC’s recent expansive interpretation of article 22 in Illumina/Grail, this pathway for catch-and-review of below-threshold deals will be shut off.

The DMA: a new EU ex ante competition regulation of digital platforms

The DMA was adopted on 18 July 2022 with an aim to address a perceived enforcement gap in digital markets that are fast-moving and present unique characteristics such as high barriers to entry and strong network effects. It imposes far-reaching ex ante prohibitions and obligations on the largest digital platforms and applies in parallel to traditional competition rules. It also overlaps with other areas of law, including data protection law, and compliance with the DMA may affect companies’ approach towards the GDPR.

Who is in the DMA’s scope?

The DMA applies to companies that have been designated as ‘gatekeepers’ by the EC with respect to their CPSs.^[73]

A company qualifies as a gatekeeper if: it has a significant impact on the internal market; it provides a CPS which is an important gateway for business users to reach end users; and it has (or is expected to have) an entrenched and durable position in the market.

There is a rebuttable presumption that a platform is a gatekeeper if the following quantitative criteria are met:

• the company has an annual EU revenue of at least €7.5 billion in each of the last three financial years, or its average market capitalisation or equivalent fair market value is at least €75 billion (up from €6.5 billion and €65 billion in the original proposal), and it provides the CPS in at least three EU member states;
• the company operates a CPS with at least 45 million monthly active end users established or located in the European Union, and has more than 10,000 yearly active business users established in the European Union in the last financial year;^[74] and
• the company meets the other two criteria in each of the past three financial years.

Even below the quantitative thresholds, the EC can designate gatekeepers based on a market investigation which demonstrates the above factors. In addition, the EC can impose certain obligations on companies whose competitive position is ‘proven but not yet sustainable’ (ie, on emerging gatekeepers).^[75]

Conversely, even if the quantitative thresholds are met, gatekeepers can rebut the presumption by showing that the qualitative aspects are not met (eg, that a given product or service is not an important gateway for business users to reach end users).^[76]

First wave of gatekeeper designations 

Companies must self-assess and notify the EC within two months of crossing the quantitative thresholds. The EC is solely responsible for designating gatekeepers under the DMA. It will review the gatekeeper status designation regularly, at least every three years.

On 5 September 2023, the EC announced the designation of six gatekeepers: Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft.^[77] This started a six-month compliance countdown (as of 7 March 2024) across the 22 CPSs impacted.

Some companies successfully rebutted the presumption of a gatekeeper status for certain services, despite meeting the quantitative threshold: Alphabet (Gmail), Microsoft (outlook.com) and Samsung (internet browser).

TikTok owner ByteDance also attempted to rebut the gatekeeper presumption, but it was rejected by the EC without a market investigation. An appeal before the GC is pending.^[78]

To better assess some rebuttal attempts, the EC decided to open market investigations to determine whether some of the services provided by Microsoft (Bing, Edge and Microsoft Advertising) and Apple (iMessage)^[79] should benefit from a rebuttal of the presumption. It had five months to conclude its investigations, which it closed on 13 February 2024 by accepting the rebuttals.^[80]

In parallel, the EC opened a market investigation to assess whether Apple’s iPadOS should be designated as a CPS, despite not meeting the quantitative thresholds. On 29 April 2024, the EC designated Apple with respect to iPadOS as a gatekeeper, starting the six-month compliance countdown.^[81]

Second wave of designations

On 1 March 2024, the EC announced that Booking.com, X and ByteDance had notified their potential gatekeeper status.^[82] On 13 May 2024, the EC designated Booking as a gatekeeper in relation to its online intermediation service, Booking.com. Booking is the first European company designated as a gatekeeper and has six months to comply with the relevant DMA obligations and to submit a compliance report to the EC.^[83] The EC decided not to designate X Ads and TikTok Ads, noting that while both met the quantitative thresholds, neither qualified as an important gateway. Both X and ByteDance had submitted rebuttal requests along with their respective notifications. The EC opened a market investigation to further assess X’s rebuttal request with respect to its online social networking service, X on 13 May 2024. The investigation should be completed within five months (around October 2024).

DMA’s obligations and prohibitions

The DMA sets out a list of ex ante conduct obligations and prohibitions for gatekeepers, covering a wide range of issues:

• Apps and app stores: gatekeepers must:
  • allow sideloading of third-party apps or app stores, and permit those to be set as default;^[84]
  • allow end users to easily uninstall,^[85] switch between and subscribe to, different apps;^[86]

provide access to their app stores (and to search engines and social networks) at fair, reasonable and non-discriminatory conditions;^[87]

• not require app developers to exclusively use the gatekeeper’s in-app payment system for in-app purchases;^[88] and
• not engage in anti-steering.^[89]
• Use of, access to, and portability of data: gatekeepers must:
  • obtain end-users’ consent in order to combine personal data^[90] and process third party data for advertising purposes;^[91]
  • refrain from using data about business users generated through their use of the CPS when competing with them;^[92]
  • provide business users with access to data that is generated by them and their customers on the CPS in real time;^[93]
  • provide rivals with access to user generated online search data;^[94] and
  • provide ‘effective portability’ of end users’ data generated when using gatekeepers’ services, including through continuous and real-time access to the data.^[95]
• Self-preferencing: gatekeepers are prohibited from treating their own services/products more favourably in ranking, indexing and crawling.^[96]
• Tying: gatekeepers are prohibited from:
  • requiring businesses or end users to use, offer or interoperate with their identification services, web browser engines, payment services and in-app purchase mechanisms;^[97] and
  • requiring end users to subscribe to further CPSs, as a condition for subscribing to any of their other CPSs.^[98]
• Ad transparency: gatekeepers must provide advertisers and publishers with:
  • information about prices paid and remuneration received;^[99] and
  • access to performance measuring tools and data.^[100]
• Interoperability: gatekeepers must allow:
  • providers of services and hardware access to, and interoperability with, their OSs or virtual assistants to the same extent as to their own services and hardware;^[101] and
  • their number-independent interpersonal communication services (NI-ICSs), such as instant messaging services, to interoperate with other NI-ICSs.^[102]
• Termination of use: gatekeepers are prohibited from imposing contractual or technical restrictions to termination (eg, unsubscribing) on users.^[103]
• Most favoured nation (MFN) clauses: gatekeepers are prohibited from imposing narrow and wide MFN clauses on business users.^[104]

DMA enforcement

The EC is the sole public enforcer of the DMA and has significant enforcement powers. It can levy fines of up to 10 per cent of the company’s total worldwide annual turnover, and up to 20 per cent in the case of repeated infringements.^[105] It can also impose periodic penalty payments.^[106] In addition, where there is systemic non-compliance (three infringements in eight years), the EC will be able to order conduct or structural remedies, including divestiture and break-up of repeat offenders.^[107] The EC launched a whistleblower tool for the DMA (and the Digital Services Act) in April 2024, through which individuals can provide information to the EC on suspected violations of DMA obligations.^[108]

Starting from the designation decision (ie, 5 September 2023), the gatekeepers had a period of six months to show DMA compliance by submitting compliance reports to the EC (ie, by 7 March 2024).^[109] The EC opened its first investigations into potential non-compliance on 25 March 2024, covering allegations against Alphabet’s rules on anti-steering in Google Play and self-preferencing on Google Search, Apple’s rules on anti-steering in the App Store and various user choice obligations, and Meta’s ‘pay or consent model’.^[110]

In parallel with the EC’s public enforcement of the DMA, the DMA can also be enforced via private actions in courts of member states.^[111] While Germany has expressly incorporated private actions under the DMA into its framework for cartel damages claims,^[112] other member states have not provided such legal clarity, leaving room for significant uncertainty and forum shopping.

National analogues to the DMA

In 2021, Germany introduced a new section 19a Act against Restraints on Competition (ARC). This new regime applies to companies with ‘paramount cross-market significance’ (ie, mainly large multisided platforms and online intermediaries that have a very strong presence as a platform and the necessary resources and strategic positioning to exercise influence over companies that rely on the intermediaries to reach their customers).^[113] The German Federal Cartel Office (FCO) has since designated four companies: Alphabet, Amazon, Apple and Meta, and is seeking to designate Microsoft, too. Under the new regime the FCO may impose obligations and prohibitions that are similar in scope to the DMA (eg, covering self-preferencing, tying and bundling, or refusing to improve interoperability).^[114] The FCO has since initiated numerous investigations against designated companies.^[115]

Section 19a ARC and the DMA apply concurrently and after engaging with the EC, the FCO may designate companies and impose additional duties on companies already designated as gatekeepers under the DMA.^[116] The German regime has inspired other EU member states, too. For instance, Hungary recently announced that it intended to introduce its own regime modelled on Germany’s section 19a ARC.^[117]

In parallel, the United Kingdom is working on its own digital rulebook via the Digital Markets, Competition and Consumers Bill (DMCC).^[118] If passed, the CMA would gain the power to designate firms as having ‘strategic market status’ (SMS) regarding one or more digital activities. The CMA would then create, in cooperation with each designated company, a customised code of conduct including obligations and prohibitions specific to each. As of writing, the SMS regime is expected to commence in late 2024.

New frontiers: generative AI and virtual worlds

Generative AI

Antitrust regulators are increasingly focusing on AI, both in the context of traditional antitrust rules and new digital regulations such as the DMA. They are looking into specific partnerships between generative AI developers and large tech companies under both merger and conduct rules while also conducting studies into the sector in general, which may lead to formal antitrust investigations in the future.

On 9 January 2024, the EC published a call for contributions focused on competition in generative AI. In addition, the EC stated that it will look at the agreements between ‘large digital market players’ and ‘generative AI developers and providers’, presumably both under merger rules and article 101 TFEU. Interested parties could submit contributions until 11 March 2024.^[119] On 8 February 2024, the FCA announced that it had also launched an inquiry into the competitive functioning of the AI sector. Like the EC, the FCA was interested in the investments of large digital players into AI companies, as well as the importance of cloud computing infrastructure, data and a skilled workforce. The FCA’s opinion is due before the summer and the head of the agency has already flagged initial concerns around ‘major digital players . . . consolidating – or leveraging – their current market power upstream in the generative AI value chain’.^[120]

In the United Kingdom, the CMA is reviewing AI Foundation Models and has engaged with stakeholders across the United Kingdom, United States and elsewhere. It published an updated report in April 2024 outlining its concerns around consolidation, access to critical inputs and leveraging of market positions ­– similar to the EU agencies.^[121] Another update is expected in Autumn 2024. It will also publish a joint statement with the United Kingdom’s privacy regulator, the Information Commissioner’s office, covering areas of crossover between competition, consumer and data protection objectives.

In addition, competition agencies continue to closely assess whether investments by large tech companies in AI companies constitute reviewable mergers.^[122] Both the EC^[123] and the CMA^[124] are assessing whether Microsoft’s investment in OpenAI is reviewable under their rules, and the FCO noted that while it does not have jurisdiction currently, it would ‘keep a very close eye’ on developments in Microsoft’s influence.^[125] On 24 April 2024, the CMA invited comments on the partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and on Microsoft’s hiring of former employees and related arrangements with generative AI start-up Inflection AI.^[126] Invitations to comment (ITCs) are a preliminary part of the CMA’s information gathering process and come before the formal launch of a review. Input was solicited until 9 May 2024.

The CMA closed a probe into the Microsoft/Mistral partnership on 17 May 2024, noting it did not have jurisdiction as the structure did not confer on Microsoft the ability to materially influence Mistral’s commercial policy. While the EC confirmed it would scrutinise this deal as part of its consultation on competition and generative AI, it recently noted it does not raise competition concerns.^[127] The EC also noted that Microsoft’s hiring of the co-founders and most of the employees of Inflection did not constitute a notifiable merger (although the CMA’s views are still pending). EC officials added that if such occurrences were systematically repeated to circumvent merger rules, changes to the merger rules could be required.^[128]

AI and the DMA

While the DMA does not explicitly refer to AI, it applies to AI tools to the extent that a CPS (eg, online search engines and virtual assistants) includes such tools. For instance, the EC’s market investigation of Microsoft Bing under the DMA addressed its AI chatbot function.^[129]

Also, in December 2023, the European Parliament called on the EC to assess the need to potentially expand the DMA’s scope to include generative AI services.^[130] While the current spotlight on the sector could see the EC launch a market investigation to examine whether generative AI-related services should be included in the list of CPSs, it may be difficult to properly delineate them given the horizontal aspect of generative AI features, which may be incorporated in many different digital services.

Virtual worlds

On 9 January 2024, the EC also published a call for contributions on competition in virtual worlds.

While this is an area where we have seen less activity compared to generative AI, EC officials have voiced their concerns about possible competition issues in the metaverse. In 2022, two officials outlined the potential competition concerns in the metaverse, highlighting features such as the presence of platforms, strong network effects, and risk of tipping.^[131] These issues could be addressed by traditional antitrust tools or the DMA in situations involving gatekeepers. More recently, EC competition commissioner Margrethe Vestager flagged the need to assess what ‘healthy competition’ should look like in the metaverse.^[132] She also acknowledged that virtual worlds experience significant innovation and that regulators should be ‘careful’ when considering intervention.^[133] For the time being, no targeted legislation seems to be underway, the current EU regulations (eg, TFEU, DMA, the Digital Services Act and the AI Act) being considered as sufficient to catch practices in the metaverse.

^*The authors wish to thank Julius Giesen for his contribution to this chapter.

---

Endnotes

(GWB Digitalization Act)’ (19 October 2020).