The Digital Markets Act (DMA), which entered into force on 1 November 2022, introduces measures to limit the anticompetitive behaviours of designated “gatekeepers”. By August 2023, the European Commission will designate the “gatekeepers” that will be required to comply with DMA requirements within six months - i.e. by early 2024.
Designated gatekeepers will typically be digital platform companies that, by meeting certain quantitative and qualitative criteria set out in the DMA, are regarded as having an entrenched position and acting as a gateway between businesses and their end users. The DMA forms part of the EU digital and data strategy to unlock innovation while ensuring its digital sovereignty by setting its own standards concerning data, technology, and infrastructure. Global digital and technology platforms, such as those providing online search engines, social networking, cloud services, or other online intermediation services – which the European Commission says could include those active in the field of financial services (FS) – are likely to be in scope of the DMA.
We believe that some of the DMA's measures will support competition in digital FS. For example, where the digital gatekeepers generate and hold data about business and end users using their in-scope platform services, users will have the right to access that data or authorise third parties (TPs) – including FS firms, in principle – to do so.
In addition, if FS firms use an in-scope platform to interact with or advertise to their customers, they too would be able to access relevant platform data, or have a TP do so, to improve their services and customer reach. The DMA will also prohibit gatekeepers from mandating the use of the gatekeeper’s own payment service as a condition of using their core platform services, and require them to give users the right to choose TP payment options. App developers should also get access to and be able to interoperate with smartphone functionalities crucial to enable mobile payments, such as near-field communication chips.
Details on how things will work in practice (e.g., data-sharing with authorised TPs) will likely be clarified in upcoming secondary legislation and discussions between gatekeepers and the European Commission. But while the DMA’s impact is not immediate, it will be significant – assuming the regulation is implemented and enforced effectively.
Therefore, FS firms' 2023 strategy decisions will benefit from considering how the DMA could change long-term market structures and their competitive landscape, and how to respond. They should also consider what additional DMA data they could utilise for product development and service improvement purposes, but also whether their digital growth strategies could put them in the scope of the DMA in the future.