X, formerly known as Twitter before Elon Musk’s takeover, will not have to comply with the strict obligations of the EU’s Digital Markets Act (DMA), people with knowledge of the matter report. Big Tech firms that do have to comply include Alphabet, Amazon, Apple, Meta, Microsoft, ByteDance and Booking.com.
The DMA is one of the toughest policies in the EU targeting what many see as the monopolization of digital markets by a few tech companies. Its restrictions apply to firms that are deemed ‘gatekeepers’ of the markets they operate in. The law is aimed at creating a fairer business environment in the digital landscape.
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Gatekeeper businesses have to make their messaging apps interact with rivals, allow users to decide which pre-installed apps appear on their devices and cannot favour their own services.
One of the toughest fines for companies that break these rules would risk 10% of their annual turnover, which is subject to increase to 20% if there are repeated infringements. The EU says it’ll provide a better and safer online environment for users.
The criteria to be designated as a gatekeeper, as per the EU Commission, include having:
- A strong economic position, significant impact on the internal market and are active in multiple EU countries
- A strong intermediate position, meaning that they link a large user base to a large number of businesses
- An entrenched and durable position in the market, meaning that their position has been stable over time
The company must also have over 45 million monthly active users (X has 335 million) and a $81b market capitalisation.
The EU Commission opened an investigation on whether X met these criteria in May and will formally announce the decision next week, according to sources.
X argued that it did not meet the criterion of linking a large user base to a large number of businesses, despite having a substantial active user base.
Recently, X was reinstated in Brazil after being banned for six weeks for a failure to comply with local laws. The ban followed a months-long battle between Elon Musk and the Brazil Supreme Court. The court wanted Musk to name a local representative and for the platform to do more to combat far-right misinformation and anti-democratic content. The ban occurred after X failed to comply but is set to be lifted after the company paid fines of $5m.
