The European Commission has just designated Booking as a gatekeeper under its Digital Markets Act (DMA), which means the travel platform now has to comply with stricter EU regulations to ensure better services and fair competition.
1. Digital Markets Act
The DMA aims to ensure contestable and fair markets in the digital sector. It regulates gatekeepers, which are large digital platforms that provide an important gateway between business users and consumers, whose position can grant them the power to act as bottlenecks in the digital economy.
There are three main cumulative criteria that presumptively lead to a designation as a gatekeeper:
- A size that impacts the internal market: this is presumed to be the case if the company achieves an annual turnover in the European Economic Area (EEA) equal to or above €7.5 billion in in each of the last three financial years, or where its average market capitalisation or equivalent fair market value amounted to at least €75 billion in the last financial year, and it provides a core platform service in at least three Member States.
- The control of an important gateway for business users towards final consumers: this is presumed to be the case if the company operates a core platform service with more than 45 million monthly active end users established or located in the EU and more than 10,000 yearly active business users established in the EU in the last financial year.
- An entrenched and durable position: this is presumed to be the case if the company met the second criterion in each of the last three financial years.
Platforms are automatically designated as gatekeepers if they are found to meet these criteria, but have the right to appeal the decision and submit a rebuttal through which they can demonstrate their position is the EU market is not strong or important enough for the designation.
Once a gatekeeper designation is in place, the platforms have to adhere to stricter rules, including:
- allow third parties to inter-operate with the gatekeeper’s own services in certain specific situations
- allow their business users to access the data that they generate in their use of the gatekeeper’s platform
- provide companies advertising on their platform with the tools and information necessary for advertisers and publishers to carry out their own independent verification of their advertisements hosted by the gatekeeper
- allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform
- not treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper’s platform
- not prevent consumers from linking up to businesses outside their platforms
- not prevent users from un-installing any pre-installed software or app if they wish so
- not track end users outside of the gatekeepers’ core platform service for the purpose of targeted advertising, without effective consent having been granted.
2. Booking
According to HOTREC, the umbrella organisation representing Europe’s hospitality industry, Booking has been attempting to prevent hotels from offering better prices on their own distribution channels than via the Booking.com platform. Moreover, the company has not been sufficiently sharing its data with hotel partners, which welcome the gatekeeper designation.
After a decade-long struggle between European hotels and Booking.com, the DMA is now a real game changer.
Alexandros Vassilikos, HOTREC President
“Today’s good news is – holidaymakers will start benefiting from more choice and hotels will have more business opportunities”, said Margrethe Vestager, European Commission Executive Vice-President in charge of competition policy.
Following its designation, Booking now has six months to comply with the relevant obligations under the DMA, offering more choice and freedom to end users and fair access of business users to the gatekeeper services. However, some of the DMA’s obligations start applying with immediate effect, for example, the obligation to inform the Commission of any intended concentration in the digital sector. The company also has six months to submit a detailed compliance report in which it outlines how it complies with each of the obligations of the DMA.
The Commission will monitor the effective implementation and compliance with the obligations. In case a gatekeeper does not comply with the obligations laid down by the DMA, the Commission can impose fines of up to 10% of the company’s total worldwide turnover, which can go up to 20% in case of repeated infringements. In case of systematic infringements, the Commission is also empowered to adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.
3. X under further investigation
Booking was designed as a gatekeeper today, on 13 May, following an official notification received by the company on 1 March. At the same time, 3 other services were notified about an upcoming designation: X, X ads and TikTok Ads.
The Commission has opened a market investigation to further assess the rebuttal submitted by X. This rebuttal argues that, despite meeting the thresholds, X does not qualify as an important gateway between businesses and consumers. The investigation should be completed within five months.
Another rebuttal was submitted concerning the online advertising service X Ads. In this case, the Commission has concluded that, although X Ads meets the quantitative designation thresholds under the DMA, the core platform service does not qualify as an important gateway. Therefore, the Commission decided not to designate X Ads.
Lastly, ByteDance’s online advertising service TikTok Ads, also contested their designation. The Commission has concluded that, although TikTok Ads meets the quantitative designation thresholds under the DMA, the platform also does not qualify as an important gateway, so it was not designated TikTok Ads either.
