Amidst a series of other initiatives in the area of platform regulation, preparations for the implementation of the Digital Markets Act (“DMA”) are well underway. The Commission is informally meeting with interested stakeholders in order to gather information about specific services and practices that should be covered by the DMA. Companies that meet the DMA thresholds are working on their notification and compliance strategies while some of those companies are also certainly preparing a rebuttal.
The effective implementation of the DMA is no easy task. The DMA’s “dos” and “don’ts”, including the “self-executing” obligations it establishes, raise complex interpretation challenges facing the Commission, which must be well-resourced to ensure that the gatekeepers’ compliance plans “deliver” for the businesses and consumers the DMA is expected to protect.
However, the effective implementation of the DMA does not only concern the DMA itself, for the DMA will not apply in a vacuum. Many rules have been adopted (or revised) in recent years to reflect the role of platforms in our lives. Some other rules have existed for decades. How the DMA will interact with the existing framework is a topic that has not been extensively discussed so far. Commentators have largely focused on the obvious, that is, the relationship between the DMA and competition law. However, the DMA is expected to apply “without prejudice” to many other instruments, including the General Data Protection Regulation (GDPR), consumer protection rules, and media regulation.
A reading of the “without prejudice” provisions of the DMA suggests that all legislative instruments that govern the conduct of gatekeeper platforms (in the EU and domestically) will complement each other. Yet, it is doubted whether the DMA will indeed apply without prejudice to (i.e., without detriment to any existing right or claim enshrined in) all the rules that apply to platforms. In many cases, tensions are expected to arise with respect to the scope of the covered services (the DMA refers to other instruments for the definitions of the “core platform services” it covers). In other cases, the DMA obligations may contradict (national and EU) rules that apply to gatekeepers (for a more detailed discussion and my take on this matter see here).
This issue has major practical implications. If potential conflicts remain unaddressed, there will be legal uncertainty (which will create confusion and trigger litigation). Moreover, though the objectives the DMA pursues are undoubtedly noble, there are other instruments that pursue other (equally important) goals, such as media pluralism. Where conflicts are not resolved in such cases, we cannot expect the emerging regulatory regime that governs platforms to reach its full potential.
One sector that will be affected by tensions between the DMA and other regulatory rules is undoubtedly the media sector. On the one hand, media organizations rely on gatekeepers to reach their audiences. Therefore, the DMA is expected to address several issues of concern to the media, such as access to audience data, transparency in online advertising markets, etc. On the other hand, they also rely on other instruments which ensure that platforms do not prevent the media from reaching citizens. One such example is the Audiovisual Media Services (“AVMS”) Directive, which covers video-sharing platforms and social networks (and national rules implementing or going beyond the Directive to protect media pluralism).
This post examines the relationship between the DMA and the AVMS Directive to highlight areas where tensions may arise. However, the implications of this issue for the media sector go beyond the AVMS Directive, for there are many other rules and initiatives (e.g., the proposal for a European Media Freedom Act) that may raise similar challenges.
The relationship between the DMA and the AVMS Directive: Setting the scene
The AVMS Directive seeks to complete the internal market for audiovisual media services. Until recently, it applied to linear broadcasters and video-on-demand platforms. However, it was recently revised to cover video-sharing platforms (VSPs) and social networks.
Broadly speaking, the DMA and the AVMS Directive address completely different matters. The latter establishes obligations governing content that incites hatred or violence, audiovisual commercial communications, and the protection of minors. The former regulates practices which prevent business users from reaching consumers. However, that the two instruments tackle different problems does not mean that they are fully compatible or merely complementary. This is for two reasons. First, in transposing the AVMS Directive, Member States may adopt rules (e.g., rules to ensure the prominence of general interest content) which apply to gatekeepers, and which may contradict the DMA. Secondly, the DMA treats VSPs and social networks as two distinct categories of core platform services that fall under its scope. Yet, the AVMS Directive applies to social networks only to the extent that they qualify as VSPs.
Prominence regulation as a potential area of conflict
Broadly speaking, the AVMS Directive regulates aspects relating to content dissemination in order to protect the general public. The DMA does not establish such rules. The only area of common concern appears to be advertising, but no conflict is expected to arise. By means of example, the AVMS Directive establishes that VSPs must ensure that all audiovisual commercial communications (i.e., advertisements) must be readily recognisable as such and that they should not use subliminal techniques. The DMA requires gatekeeper VSPs to provide advertisers with access to an independent verification of the advertisements inventory. Both sets of obligations seek to promote transparency in advertising markets, but they do it differently and intervene at different levels of the supply chain.
However, the story about the interplay between the DMA and the AVMS Directive does not end here, for Member States can go beyond the obligations established in the latter. For example, the AVMS Directive provides that Member States may “impose obligations to ensure the appropriate prominence of content of general interest under defined general interest objectives such as media pluralism, freedom of speech and cultural diversity”.
In such cases, the DMA “clarifies” that:
“[n]othing in this Regulation precludes Member States from imposing obligations on undertakings, including undertakings providing core platform services, for matters falling outside the scope of this Regulation, provided thatthose obligations are compatible with Union law and do not result from the fact that the relevant undertakings have the status of a gatekeeper within the meaning of this Regulation”.
It is doubted whether the DMA would be without prejudice to such national rules, including rules that ensure the appropriate prominence of general interest content. Though the Directive does not explain what form prominence rules might take (this is entirely left up to the Member State concerned), those are essentially rules imposing on platforms the obligation to engage in positive discrimination (so that the protected content is easy to find). This may, for instance, include higher ranking in the list of available content items.
However, Article 6(5) of the DMA includes an obligation that will require platforms to (a) refrain from engaging in self-preferencing when ranking products or services and (b) apply fair and non-discriminatory conditions to such ranking. It is far from clear whether this obligation only prohibits self-preferencing or whether it obliges platforms to refrain from discriminating altogether. Recital (52) of the DMA supports the latter interpretation because it lays down that “the conditions that apply to […] ranking should also be generally fair and transparent. […] To ensure that this obligation is effective and cannot be circumvented,it should also apply to any measure that has an equivalent effect to the differentiated or preferential treatment in ranking”. “Differentiated treatment”, which is defined in the P2B Regulation, covers both self-preferencing as well as the preferential treatment of business users that the gatekeeper does not control.
If the DMA indeed establishes a general non-discrimination obligation, the following two questions arise: First, are platforms covered by the DMA also covered by prominence regulation? If the scope of the two instruments is different, no tension would arise. Secondly, if the scope is the same, should the DMA prevail over prominence rules?
As regards the first question, the answer would depend on the media policy priorities of each Member State. For example, some Member States may choose to impose prominence rules on video-on-demand platforms only, which are currently not covered by the DMA. Other Member States may choose to apply prominence rules to several types of platforms, ranging from operating systems to VSPs. By means of example, the prominence rules established in the Italian law transposing the AVMS Directive captures “service providers that index, aggregate, or retrieve audiovisual or audio content, and providers that determine how content is presented on user interfaces”. This is a broad definition that includes, inter alia, VSPs, social networks, app stores and operating systems. This would suggest an overlap in scope between the DMA and the Italian law. This brings us to the second question: in such cases, which law prevails?
In principle, based on the principle of supremacy of EU law as per Van Gend en Loos, the DMA would prevail over national rules. However, since the DMA protects the internal market and Member States are entitled to restrict the freedom to provide services under specific conditions, one would need to assess whether prominence rules could survive. The Court of Justice of the EU (CJEU) has been asked to rule on the compatibility with the internal market of national measures aimed at safeguarding media pluralism (this is the objective pursued by prominence regulation). In these cases (see, for example, here), the CJEU refused to read media pluralism within one of the narrowly interpreted grounds for justification laid down in Article 52 TFEU. It has, however, acknowledged that a media policy may constitute an overriding requirement relating to the general interest, thereby justifying restrictions on the freedom to provide services. The main criterion that the national rule must fulfil is that the restriction must be “objectively necessary” to achieve the objective it pursues. In certain cases (see, for instance, here), the CJEU held that rules seeking to protect media pluralism are not objectively necessary. In other cases (see, for example, here), it allowed the rules to override the EU provision(s) at stake.
In view of the above, whether prominence regulation will continue to apply post-DMA may depend on how those rules are designed by the Member State concerned to meet the “objective necessity” criterion and the CJEU’s assessment of the matter on a case-by-case basis.
Matters of scope: Does the DMA apply in cases where social networks qualify as VSPs?
VSPs and social networks have recently been included in the scope of the AVMS Directive. Recital (4) explains why:
“Video-sharing platform services provide audiovisual content which is increasingly accessed by the general public, in particular by young people. This is also true with regard to social media services […]. Those social media services need to be included in the scope of [the] Directive […] because they compete for the same audiences and revenues as audiovisual media services. Furthermore, they also have a considerable impact in that they facilitate the possibility for users to shape and influence the opinions of other users. Therefore, […] those services should be covered by [the] Directive […] to the extent that they meet the definition of a video-sharing platform service”.
Though there are no doubts as to whether the AVMS Directive applies to VSPs, the situation is less clear about social networks. This is because the aim of the Directive is not to regulate social networks generally, but only to the extent that the provision of programmes and user-generated videos constitutes an essential functionality of the social network concerned. This is the case where “the audiovisual content is not merely ancillary to, or does not constitute a minor part of, the activities of that social media service”. In such cases, social networks are VSPs within the meaning of the AVMS Directive and the obligations established in the latter apply.
The question that arises is what happens if, on certain occasions, a social network qualifies as a VSP according to the AVMS Directive. In such cases, for the purpose of applying the DMA, is the social network a “social networking service” or a “video-sharing platform service”?
The tension that may arise can be illustrated through the following example: Article 6(12) of the DMA, which imposes an obligation to grant access on fair, reasonable, and non-discriminatory (FRAND) terms, only applies to a specific set of core platform services, including social networks (but excluding VSPs). This begs the question: since the DMA defines VSPs by reference to the AVMS Directive, how will the matter be approached in case a social network qualifies as a VSP? Would the platform concerned fall outside the scope of Article 6(12) for the reason that the DMA is without prejudice to the AVMS Directive?
Conclusion
The DMA is expected to change the rule book. It will establish a new regime for gatekeeper platforms in order to address imbalances in bargaining power that have given rise to practices which harm businesses and end users alike. Without disputing that the DMA may contribute to fair dealing in platform-to-business and platform-to-consumer relations, the reality is that it is not the only instrument that regulates platforms. A series of other instruments that pursue similar (e.g., fairness) or completely different (e.g., media pluralism) objectives have recently been adopted or revised.
For the overall framework to reach its full potential, the DMA should apply in a way that does not undermine any existing rights or claims enshrined in those other instruments. This is particularly the case with media regulation, which has been undergoing a process of reform in recent years to ensure that the law reflects adequately reflects the role that platforms play in determining the type and range of media content citizens engage with.
Note: The topic this post tackles (and, more broadly, the relationship between platforms and the media) will be discussed in an event we are organizing together with Compass Lexecon that is scheduled to take place on Wednesday, 8 February. You can register through the following link: https://www.compasslexecon.com/media-competition-and-regulation-in-the-digital-age-register-your-interest/.
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