MEF CEO Dario Betti comments on the EU’s findings regarding the status of Elon Musk owned social network “X”, formerly known as Twitter, with regards to its status as an internet “gatekeeper” which if found to be the case would place significantly increased regulatory burden and responisblity upon the platform.
On October 16 2024, the European Commission decided that X’s social networking service doesn’t qualify as a “core platform service” (CPS) under the Digital Markets Act (DMA).
This decision came after a lengthy investigation, started in May 2024, to see if X should be designated as a “gatekeeper.” Being labeled a gatekeeper would place X under stricter regulations aimed at ensuring fair competition in the digital space.
While X meets some of the DMA’s quantitative criteria for a gatekeeper, it successfully argued that its social networking platform isn’t a primary gateway between businesses and consumers. This outcome gives X certain advantages by allowing it to avoid the tighter rules gatekeepers face under the DMA.
Who are the Digital Gatekeepers for the EU?
These are the designated Gatekeeper by the European Commission.
On 6 September 2023 the European Commission designated for the first time six gatekeepers – Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft – under the Digital Markets Act (DMA). On 29 April 2024, the Commission designated Apple with respect to its iPadOS, its operating system for tablets, as a gatekeeper under the DMA. On 13 May 2024, the Commission also designated under the DMA, Booking as a gatekeeper for its online intermediation service Booking.com. In total, 24 core platform services provided by those gatekeepers have been designated.
The Digital Markets Act is an EU framework focused on keeping competition fair, especially among large online platforms. It targets big players that control significant parts of the digital market, which the law calls “gatekeepers.” These are companies that hold a strong position in the market, enabling them to act as intermediaries between businesses and consumers. By imposing rules on these gatekeepers, the DMA aims to level the playing field, giving smaller competitors a fair shot and protecting users from practices that could limit their choices.
X will benefit from the exclusion
X benefits a lot by not being tagged as a gatekeeper. The DMA imposes strict rules on gatekeepers, such as preventing them from favouring their own products over others, making it easier for users to transfer data to other platforms, and ensuring that their services work well with others. Without the gatekeeper label, X can be more flexible in its business strategies, especially in terms of data management and monetization.
This means X can keep more control over its platform, avoid costly compliance requirements, and maintain its competitive edge in the rapidly changing tech industry.
Gatekeepers must follow specific rules under the DMA. They’re banned from anti-competitive practices, such as giving their own products special treatment. They also must allow data portability, which lets users move their data to different services more easily.”
Gatekeepers must follow specific rules under the DMA. They’re banned from anti-competitive practices, such as giving their own products special treatment. They also must allow data portability, which lets users move their data to different services more easily. Gatekeepers are also required to make sure their platforms are compatible with third-party services, helping foster competition. Finally, they’re prohibited from combining personal data across different services without clear consent from users, helping protect user privacy.
Failure to comply with these rules carries serious penalties, underscoring the EU’s commitment to enforcing fair competition. Companies violating the DMA can face fines of up to 10% of their global revenue, with additional consequences, like forced interoperability, for repeat offenses. These penalties make it critical for companies to assess and, if possible, contest a gatekeeper designation, as X has done successfully.
The reasons to exclude X: market control
The European Commission’s decision came after a detailed review of X’s position in the market and its role in the digital ecosystem. Although X meets some of the DMA’s quantitative thresholds—such as user numbers and revenue—the Commission determined that X doesn’t have the sort of gatekeeping power that would make it a key player between businesses and consumers. This decision reflects the Commission’s role in looking not just at numbers but also at a company’s actual influence and how it affects market dynamics.
The DMA uses three main criteria to decide if a company qualifies as a gatekeeper. First, it must have a significant impact on the EU market. Second, it should provide a core platform service that acts as an essential gateway for businesses to reach consumers. Finally, it must hold a long-term or expected dominant position. While the DMA includes specific thresholds for these requirements, such as revenue, market cap, and user numbers, the Commission’s decision on whether a company is a gatekeeper goes beyond just meeting these numbers. It takes a more nuanced view, balancing quantitative data with a closer look at market impact.
In Conclusion
The European Commission’s decision on X shows a balanced approach to enforcement, where both quantitative thresholds and qualitative assessments shape the outcome. However, for X avoiding gatekeeper status brings substantial benefits, enabling it to focus on innovation without the compliance burdens that come with gatekeeper obligations.
