European Union negotiators reached a political agreement this week on the Digital Markets Act, creating a new regulatory framework aimed at the largest online platforms and giving Brussels tools that could reshape app stores, messaging services, advertising businesses and digital marketplaces well beyond Europe.

The Council of the European Union said Friday that negotiators had agreed on rules for companies designated as digital “gatekeepers,” with fines of up to 10% of a company’s total worldwide turnover for violations and up to 20% for repeat infringements. The European Parliament described the agreement as a way to make core platform markets fairer and more contestable before entrenched conduct becomes nearly impossible to unwind through conventional antitrust cases.

A gatekeeper test built around scale

The legislation does not apply to every technology company. It targets providers of designated “core platform services” whose size and reach give them a durable position between businesses and users. Under the agreement, a company can be presumed to qualify if it has at least €7.5 billion in annual EU turnover during the previous three years or a market valuation of at least €75 billion, provides a core platform service in at least three member states, and reaches at least 45 million monthly end users and 10,000 yearly business users in the EU.

Those thresholds reflect a core premise of the original Digital Markets Act proposal: some digital markets tip toward a small number of intermediaries because network effects, data advantages and ecosystem lock-in can reinforce scale. The European Commission’s December 2020 proposal package paired the DMA with the Digital Services Act, but the two measures address different problems. The DMA is primarily about market structure and platform power; the Digital Services Act focuses more directly on responsibilities tied to online content and services.

The Commission’s impact assessment argued that existing competition enforcement often moves too slowly to correct problems in fast-moving digital markets. Antitrust investigations can take years, during which a dominant platform can deepen its position. The DMA instead creates a list of obligations and prohibitions that apply once a platform is formally designated as a gatekeeper.

Rules reach into app stores, data and self-preferencing

The agreement would restrict several practices that have become central to disputes involving Apple, Google, Meta, Amazon and other large technology companies. Gatekeepers would be barred from ranking their own products or services more favorably simply because they control the platform. They would face limits on combining personal data across services without appropriate consent and on forcing business users to adopt a gatekeeper’s own payment, identification or advertising services as a condition of access.

App-store rules are likely to be among the most closely watched provisions. The measure is intended to make it easier for business users to promote offers and conclude contracts with customers outside a gatekeeper’s platform, reducing the ability of a dominant intermediary to make itself the only commercial route between developers and users. The broader policy logic had also been tested through the Commission’s competition-policy consultation, which asked whether regulators needed a new tool to address structural competition problems before they ripened into traditional abuse cases.

The negotiated text also addresses interoperability for major messaging services. The concept is consequential because communications platforms derive much of their value from having everyone in the same network. Requiring certain forms of interoperability could let users communicate across services rather than being locked into one provider solely because their contacts are there. Technical implementation, encryption and privacy will be critical questions as regulators translate the political agreement into enforceable obligations.

Enforcement is designed to change the calculation

The maximum fines are deliberately tied to worldwide turnover, not just revenue generated in Europe. A first infringement could expose a gatekeeper to a penalty of as much as 10% of total global annual turnover; repeated noncompliance could raise the ceiling to 20%. The agreement also contemplates structural remedies in cases of systematic noncompliance, potentially including restrictions on acquisitions in sectors covered by the law.

That design seeks to solve a recurring problem in technology regulation: penalties that look large in absolute dollars may still be manageable operating costs for companies generating tens or hundreds of billions of dollars in annual revenue. A percentage-of-global-turnover formula scales with the company and can create materially different incentives for compliance.

The Commission would be the central enforcer. That gives the EU a single authority for designation and major enforcement rather than leaving the gatekeeper regime fragmented across 27 national systems. At the same time, national competition authorities will remain important sources of expertise, evidence and market intelligence.

The deal reached this week must still be translated into final legal text and formally approved by Parliament and the Council. The negotiated framework nevertheless resolves the major political questions and puts the European Union on a path toward one of the world’s most prescriptive sets of rules for dominant digital platforms.

For the technology industry, the significance extends beyond the companies that ultimately meet the gatekeeper test. Platform operators will have to examine product design, data flows, ranking systems, contractual restrictions and interoperability choices through a new regulatory lens. Smaller technology companies and developers may gain more room to reach customers directly, but they will also be watching whether new technical requirements produce unintended privacy or security costs.

The DMA is the product of a multiyear European effort to move from case-by-case enforcement toward ex ante rules. Whether it succeeds will depend on designation decisions, technical standards and enforcement after the law takes effect. But the political bargain now sets the direction: the largest digital platforms will face defined conduct rules before regulators prove a traditional antitrust violation, and repeat breaches could carry penalties measured in a fifth of global annual revenue.