Facebook Comments on the Regulatory Design of the
Digital Markets Act
The Digital Markets Act (DMA) is a significant proposal that wil sit at the centre of the EU’s
regulatory framework for digital markets and technologies. It is not only an important
measure for a company like Facebook but also for the EU’s ambitious plans in the digital
economy. The DMA truly is exceptional in that it is a completely novel way of regulating
large companies in certain digital activities rather than markets more broadly. Its reliance
on established concepts in competition law or on other regulatory frameworks is minimal
at best. This increases the need for clarity, legal certainty, and accountability.
As Facebook has engaged in constructive conversations with various stakeholders
throughout the last months, it became clear that questions on the regulatory design of
the DMA are and should be an important part of the conversation
. That is because
the regulatory design will matter greatly in the practical operation of the DMA, including by
laying out the framework for interactions between the regulator and companies falling in
scope. This in turn wil be a crucial element for companies’ compliance efforts which wil
ultimately be important for the DMA’s ability to meet its objectives.
With this paper Facebook seeks to contribute to this conversation and to make a range of
suggestions which Facebook believes would help in the practical applicability of the DMA.
Facebook is ful y aware of the political aim for the DMA to work efficiently and swiftly. While
time-consuming processes are also not in Facebook’s interest there wil be a need to make
sure some provisions wil not be applied in a disproportionate way unduly increasing legal
uncertainty and ultimately hindering innovation and reducing consumer benefits.
Facebook views the fol owing suggestions as the start of a wider dialogue and looks
forward to discussing those with various stakeholders.
Facebook believes that the following suggestions could improve the
regulatory framework of the DMA: 1. A framework with more avenues for regulatory dialogue would benefit both the
regulator and the companies in scope.
Dialogue between the regulator and companies would allow the regulator to ensure that
the objective of the DMA provisions are met from the beginning while reducing non-
compliance risk for companies.
For Facebook, meeting the DMA’s regulatory obligations wil be the overarching priority.
The DMA does not only include very strong enforcement measures but it is likely to lead
to significant compliance efforts. It is in Facebook’s interest to make sure that these
compliance efforts meet the regulatory requirements from the very beginning. The DMA
currently does not envisage any
consultative procedure for Article 5 provisions and the
regulator is under no obligation to answer to a gatekeeper’s specification request under
Article 7(7) for Article 6 provisions.
Facebook believes that a more participatory approach based on more opportunities for
dialogue can be achieved through:
1. Protected ‘first attempt’ for Article 5 provisions
. Currently there is no
consultative procedure for Article 5 provisions even though some provisions wil
involve important product design decisions Facebook believes could merit from an
exchange with the regulator. This gap could be addressed in two different ways.
First, Article 7(2) could be extended to Article 5 provisions and be made a
necessary step before the Commission can take enforcement action under Article
25 (see sub-Point 2 below).
Second, companies could file their good faith compliance measures for each Article
5 provision with the regulator which would trigger an ‘in compliance presumption’
unless the regulator objects to it within a specified timeframe. If it objects, the
company would get a chance to address that objection through a change in its
compliance measures. This process could be part of the commitments procedure
under Article 23. If the regulator does not object within the specified timeframe, the
company is presumptively compliant. The regulator can always object to
compliance measures down the line and order proceedings under Article 23 but
then the company should not be subject to fines nor should a potential non-
compliance decision count for the purposes of a systemic non-compliance
investigation under Article 16(3).
2. A decision under Article 7(2) for Article 6 provisions should be a necessary
step before the Commission can take action under Article 25.
This form of
procedural sequencing would allow for a regulatory dialogue as suggested in
Recital 58 and for companies to ensure compliance without facing enforcement
action against their good faith compliance measures. This would also prevent the
Commission from treating gatekeepers inconsistently when applying Article 16 on
systematic non-compliance, if some gatekeepers go through an Article 7(2)
process and others not. This would not prevent the Commission to take action
under Article 25 if a gatekeeper does not comply with the measures specified in a
decision pursuant to Article 7(2). Article 7(3) would have to be amended
3. The consultative process for Article 6 provisions should be improved
Whenever a company asks for clarification under the Article 7(7) process, the
Commission should be obligated to provide an answer. Currently it does not have
to do so which leaves companies in compliance uncertainty even though they have
explicitly signaled that uncertainty to the Commission under an Article 7(7)
4. The Commission should be barred from opening any enforcement
proceedings for non-compliance pending the outcome of an Article 7(7)
The Article 7(7) process currently is a key element in facilitating regulatory
dialogue, as laid out in Recital 58. That process, however, could be seriously
undermined if companies find themselves exposed to enforcement action while
they seek guidance from the Commission.
5. Introduce provisions that allow the Commission to issue guidance.
on specific obligations could provide greater clarity to companies, especial y if
preceded by consultations with gatekeeper companies and other affected parties.
2. The introduction of an efficiency defense would mitigate unintended
consequences and lead to more proportionate outcomes
Currently the DMA imposes a list of self-executing obligations and prohibitions on
companies. There are no provisions that would be applied on a case-by-case basis, i.e.
“greylist” obligations as they were termed in the run-up to the DMA. The suspension and
exemption processes in Articles 8 and 9 respectively are the only two avenues available
to suspend the applicability of provisions in whole or in part. Both articles may only take
effect on the basis of very narrow grounds. In the current DMA proposal, gatekeepers
cannot justify that a given behaviour prohibited by the DMA actually has economic
advantages for business users and/or end users that on balance is positive for the market
and leads to increased consumer welfare.
Likewise, companies do not have the possibility to demonstrate that a given practise is
incapable or unlikely to have anticompetitive effects or reduce market contestability in a
particular instance and should hence not apply. Admittedly, while it may not make sense
to subject every provision to an efficiency defense (which would also reduce administrative
burden for the regulator), companies should be given the opportunity to demonstrate the
net positive effects of behaviour that may fall under one of the Article 5 and 6 provisions -
especially for practices that are capable of improving services for consumers. For Article
6 provisions, Article 7(5) could provide an obligation for the Commission to take into
account efficiencies brought forward by companies during the specification process. 3. Exemptions from obligations should also be granted on grounds of objective
Related to the point above, the DMA currently does not al ow companies to be exempted
from obligations on grounds of objective justifications such as protecting users from harm
or service integrity. Facebook believes that such objective justifications could be
introduced in Article 9. Importantly, as a company requests an exemption it should be
protected from a finding of non-compliance under Article 25 for as long as the Commission
is assessing this request. For Article 6 provisions, Article 7(5) could also provide an
obligation for the Commission to take into account any objective justifications brought
forward by companies. Alternatively, objective justifications could be introduced within
specific obligations in that a company could justify a given practise for a specific purpose
such as protecting its users from harm. For example, Article 5(a) should stil allow
companies to use and combine data for safety, integrity, and security purposes such as
identifying behaviour that poses safety risks across services, or applying protection
measures across services (e.g. removing an account that has shared child sexual abuse
material from al services owned by the company)
4. To ensure clarity the Commission should clearly define the relevant Core Platform
Article 3(7) obliges the Commission to list the relevant CPSs that are provided by a
gatekeeper company. Where applicable, this obligation should include a duty to
specifically identify the relevant part(s) of a service / a combination of services that falls
into scope of the CPS. For example, Facebook runs services that provide an integrated
experience consisting of various different services and features that together make up the
Facebook experience. However, not al of these parts of the Facebook experience would
necessarily meet the definition of a “social networking service” which is why the
Commission should be obligated to clearly list the services within a CPS that fal in scope
as that determination wil be the anchor point for all subsequent regulatory obligations. 5. In determining that a CPS should not fall in scope despite meeting the quantitative
thresholds greater consideration should be given to the competitive environment.
It should be clarified that Article 3(4) al ows companies to argue that a CPS (and not only
a gatekeeper) should not fall in scope of Article 3(7) because they do not meet the
requirements of Article 3(1) despite meeting the quantitative thresholds in Article 3(2). In
coming to a decision on gatekeepers, the Commission is asked to consider the various
elements in Article 3(6). This should apply mutatis mutandis
to a decision on CPSs as wel .
These elements largely relate to the size and scale of the gatekeeper/CPS and miss an
important consideration: an assessment of the CPS’s competitive position in the market.
Introducing this element is important as a CPS could be a relatively ‘large’ service but stil
operate in an environment of dynamic competition and competing against more
established players. The DMA should be careful in not chil ing competition coming from
these kinds of chal enger CPSs. Equal y important, the applicability of obligations and
enforcement against a CPS that is pending an Article 3(4) review should be suspended
for the period of the review. 6. EU-wide regulatory coherence will be critically important.
The DMA is a complex piece of regulation that wil require companies to undertake careful
balancing and compliance exercises. At the same time it is an harmonization measure
based on Article 114 of the TFEU. Against this background, the possibility to apply
additional national competition rules as enshrined in Article 1(6) needs to be critically
assessed, not least because those rules might well seek to impose obligations on
gatekeeper companies that deviate from those in the DMA. As a general rule, regulatory
issues that are covered by the DMA should preempt the applicability of national rules on
those same issues. 7. It is unclear if and when regulatory obligations are to be removed.
Other asymmetrical regulatory regimes such as the EU telecoms regime operate under
the premise to be ultimately removed once competition in a given market has been
restored. The idea is that competition law would be sufficient as a ‘background regime’ to
ensure a competitive market. The DMA does not anticipate the removal of regulatory
obligations which it should once a sufficient level of ‘market contestability’ and ‘fairness’
has been achieved. In order to do that, the proposal would have to more closely define
when the two objectives, market contestability and fairness, are met. 8. The operation of the DMA will require a well-resourced regulator.
It is in companies’ interest to engage with a wel -staffed regulator who has the necessary
resources to oversee and advise on the applicability of the obligations across a
considerable number CPSs provided by a diverse group of gatekeeper companies.
Facebook is concerned that the number of staff currently foreseen is very likely to be
insufficient. This is particularly critical as on top of compliance specifications and
enforcement, the regulator wil also be responsible for resource-consuming processes
such as the various market investigations. 9. There are various ways in which due process and the level of accountability could
The fol owing is a non-exhaustive list of suggestions:
1. Companies should be given more time to respond to preliminary findings
Companies are subject to extremely short timelines to respond to any preliminary
findings. In contrast to the Commission’s open-ended timelines under Article 25,
companies must respond to any preliminary findings within 14 days pursuant to
Article 30. That number should be extended to at least four weeks.
2. Right to be heard prior to Article 8 and 9 decisions
. Article 30 DMA specifical y
refers to the right for an undertaking to be heard prior to the EC adopting a decision
under Articles 8 and 9. However, Articles 8 and 9 do not set out any requirement
for the EC to provide preliminary findings to the gatekeeper. There needs to be a
procedural safeguard for companies to address the Commission’s arguments for
having rejected a company’s request under Articles 8 and 9.
3. Companies’ rights of defence during interim measures proceedings.
Article 30 refers to the companies’ right to be heard and access to file in relation to
any preliminary findings (and specifically refers to Article 22), Article 22 does not
in turn require the EC to provide any preliminary findings to the gatekeeper
regarding the need for interim measures.
4. The market investigation into systemic non-compliance (Article 16) should
be improved and clarified
a. As long as the Article 7(2) process remains optional for the
Commission, Article 16 is at risk at being applied unfairly as some
companies may benefit from an Article 7(2) decision while others could
be subject to immediate Article 25 enforcement action counting as a
‘strike’ for the purposes of Article 16(3). For that reason an Article 7(2)
should be a necessary step before any enforcement action under Article
25 (see also Points 1.1. and 1.2. above).
b. (i) Should a company col ect three ‘strikes’ for non-compliance in
relation to three different CPSs or in relation to three different provisions
and (i ) should a company collect three ‘strikes’ for the non-compliance
without any regard to the gravity of those infringements, there wil be a
legitimate question of this measure’s proportionality to the non-
compliance at stake
c. There should be a causal link and a significance test between the
established non-compliance and the gatekeeper having further
strengthened or extended its position. The absence of a causal link and
significance test would punish companies for having competed on the
merits by e.g. having served users with more attractive and/or
With these suggestions Facebook hopes to meaningfully contribute to the ongoing
discussions on the DMA’s regulatory design and looks forward to continuing the dialogue