Digital Markets Act (DMA) for startups and SMEs: Opportunities and challenges ahead

Understanding the DMA: What’s it all about?

The DMA is a landmark regulation introduced by the European Commission (EC) to foster fair competition, protect consumers’ data privacy, and ensure a level playing field in the digital marketplace. It aims to regulate dominant digital platforms, such as ecommerce marketplaces and search engines, to prevent anti-competitive practices and promote innovation.

The DMA applies to companies who operate one or more core platform services (CPS). These companies are defined as a gatekeepers. To date, seven companies have been designated as gatekeepers: Alphabet, Amazon, Apple, Booking.com, ByteDance, Meta, Microsoft. However, the obligations and requirements imposed on these companies by the DMA will have an impact on many businesses in the EU, including SMEs and startups using the gatekeepers’ core platform services (CPS).

There are 23 identified core platform services (CPS) that are required to comply with the DMA:

• 3 operating systems (Google Android, iOS, Windows PC OS)
• 2 web browsers (Chrome and Safari)
• 1 search engine (Google)
• 4 social networks (Facebook, Instagram, LinkedIn, TikTok)
• 1 video sharing platform (YouTube)
• 3 online advertising services (Amazon, Google, and Meta)
• 2 large communication services (Facebook Messenger and WhatsApp)
• 6 intermediation platforms (Amazon Marketplace, Google Maps, Google Play, Google Shopping, iOS App Store, Meta Marketplace)
• 1 onling travel agency

DMA means more monetization opportunities for startups and SMEs

The DMA privacy law promotes transparency, data portability, and fair access to online platforms for businesses using the gatekeepers’ platforms and services. This provides SMEs with valuable tools to compete with larger competitors and protect themselves from anti-competitive practices. 

The DMA aims to ensure safety for users (data subjects) and that their consent is given before gatekeepers and other platforms access, use and share their data, for example in the scope of data portability. This access to consented data enables  startups and SMEs to seamlessly transition and expand their customer base through data portability, and effectively compete with companies that have vastly more resources in the digital single market.

Fair access to online platforms and user data help to ensure equal opportunities for SMEs to monetize their products and services on online platforms, reaching bigger audiences and generating more revenue in the digital marketplace.

Enhanced market access for small businesses

The DMA opens up new avenues for startups and SMEs by promoting fair and non-discriminatory access to digital markets. This means that small players won’t be overshadowed or locked out by market leaders. You should have equal opportunities to reach your target audience and compete on a level playing field.

How does the DMA benefit operations for startups and SMEs?

• Optimizing product listings on ecommerce platforms
  Small online retailers often face challenges in getting their products noticed on prominent ecommerce platforms like Amazon. With DMA-mandated fair practices in place, use various techniques to optimize your product listings and improve their visibility, attracting more customers and competing with larger sellers.
• Understanding content prioritization on social media platforms
  Social media platforms play a crucial role in reaching and engaging with audiences online. However, the algorithms used by these platforms to prioritize content can sometimes disadvantage smaller businesses. The DMA promotes transparency in content ranking and also prohibits the gatekeepers from giving their own content preferential ranking. This enables startups and SMEs to understand how their content is being treated and make informed decisions to enhance their reach and engagement.
• Seamless consented data transfer from gatekeeper platforms
  Startups and SMEs heavily rely on user consent and data to understand their customers and improve their products and services. The DMA’s provisions for data portability enable users to transfer their data seamlessly from gatekeeper platforms to new services. This empowers startups to attract new customers by offering a smooth transition and ensuring that users’ data remains protected, but also accessible and transferrable.

Increased transparency

Gatekeepers will be required to provide clear information on their ranking algorithms and policies to third parties using their services. This will enable startups and SMEs to optimize their advertising and data strategies and make better-informed decisions. 

How do the DMA’s transparency requirements benefit smaller companies?

• You’re a small online retailer that sells handmade jewelry
  With the DMA’s transparency requirements, you’ll be able to see how platforms like Amazon and Etsy rank your products in search results. This information will enable you to optimize your product listings and improve your visibility on these platforms, potentially leading to increased sales and revenue.
• You’re a user of a social media platform that’s been accused of suppressing certain types of content
  With the DMA’s transparency measures, you’ll be able to see how the platform’s algorithm works and understand why certain content is being prioritized or demoted. This information will enable you to make more informed decisions about the content you post and the platforms you use.
• You’re a startup that’s built a new app that competes with an app offered by a gatekeeper like Apple or Google
  With the DMA’s data portability requirements which include the need for obtaining user consent, you’ll be able to easily transfer user data from the gatekeeper’s app to your own app, enabling you to offer a seamless transition for your users and potentially attracting new customers who are looking for an alternative to the gatekeeper’s app.
• You’re a gatekeeper platform where other gatekeepers compete for the same/similar services.
  Under the DMA, gatekeepers will be required to treat all partners and themselves equally, without any preferential treatment to ensure that gatekeepers do not abuse their dominant positions. This means, for example, that search engines can’t show their own products or services at the top of search results while pushing competitors’ offerings down the list, app stores cannot feature their own apps more prominently than those of competitors, and social media platforms cannot display their own content more frequently in users’ feeds than that of competitors.

Prohibition of unfair practices

The DMA seeks to eliminate unfair practices that hinder market competition. This is great news for startups and SMEs, as it helps to ensure fair treatment and prevent dominant platforms from engaging in anti-competitive behavior. You can focus on delivering value and innovation, not on wondering how you will ever manage to compete.

How do the DMA’s competitive requirements benefit smaller companies?

• Equal visibility by eliminating unfair ranking practices 
  Your products will have a better chance of being seen by millions of potential customers on platforms like Amazon’s.
• Competitive pricing 
  The DMA prohibits big tech platforms from using their dominant position to manipulate prices or impose unfair terms on smaller retailers.
• Access to customer data 
  The DMA promotes fair access to and sharing of customer data when there is user consent, helping to ensure that small retailers have the same opportunities as larger players to understand customer preferences and tailor their offerings accordingly.
• Remedies for unfair treatment
  If you believe you have been unfairly treated by one of the gatekeeper platforms, the DMA provides mechanisms for dispute resolution and enforcement. 

Challenges that the DMA brings to small businesses

Although the DMA brings benefits for startups and SMEs, there are compliance requirements and costs for startups and SMEs as well. These may be challenging for companies with limited resources compared to larger enterprises. 

DMA compliance requirements and costs for SMEs

Adapting to the DMA’s obligations may pose challenges for startups and SMEs, especially in compliance costs. It’s crucial to familiarize yourself with the requirements and how they affect your business operations and the services you use, and allocate resources accordingly. However, it’s also important to remember that compliance is not only a legal obligation but also an opportunity to build trust with your customers. Higher trust encourages increased engagement, more consent for data use, and longer-term customer relationships.

Data protection and privacy under the DMA

Data protection and user privacy are at the core of the DMA. As a startup or SME, you must ensure that your data handling practices align with regulatory requirements. The DMA’s requirements are in line with those of the existing GDPR. They include transparency about data usage, obtaining explicit user consent, and implementing robust security measures. By prioritizing privacy and demonstrating it to users, you can gain a competitive edge that builds strong customer relationships based on trust.

Anticipating regulatory changes beyond the DMA

The digital landscape is ever-evolving, and regulations are no exception. As a startup or SME, it’s crucial to stay updated on any changes or amendments to the DMA and other relevant regulations. This will help you adapt your strategies and operations to ensure continued compliance. Following industry news, consulting legal experts, and engaging in relevant communities can be invaluable in this regard. 

Actions you can take for DMA compliance

As an SMEs or startup, you need to be proactive in anticipating and adapting to the regulatory changes brought about by the DMA. There are a number of proactive things we recommended.

1. Consult with qualified legal counsel and/or privacy experts like a Data Protection Officer before making changes

Ensure that you get guidance for your specific operations, partnerships, and regulations relevant for your business. Also ensure you get legal guidance before making changes as the law evolves.

2. Conduct a GDPR cookie audit

The DMA’s compliance requirements are in line with those of the GDPR. Perform a free cookie audit with Cookiebot CMP by Usercentrics to identify any potential compliance gaps and areas where you need to make changes to align with DMA requirements.

3. Implement a consent management platform (CMP)

A consent management platform enables you to compliantly obtain, manage, and securely store user consent. It helps you ensure that you have the required consent for data collection and/or processing activities. 

CMPs also enable you to track user preferences and enable them to be updated over time, and handle data subject requests or audits by data protection authorities. Implementing a CMP that gets you ready for the DMA can help you meet the transparency and consent requirements of the DMA.

Cookiebot CMP is the best CMP for startups and small businesses wanting to get ready for the DMA and achieve and maintain easy, automated data privacy compliance. The best part is that it’s free if you have a small website (under 50 subpages).  It also integrates with HubSpot, Umbraco, Google Analytics, Google Tag Manager, WordPress, IAB and more, and it’s IAB TCF-certified.

What happens if you don’t comply with DMA and gatekeepers’ requirements

The DMA places a strong emphasis on protecting user privacy and data. Failure to comply with the DMA’s data protection requirements can lead to reputational damage and loss of customer trust. This can result in reduced customer engagement, lower conversion rates, and ultimately, revenue loss.

More specifically, non-compliance with the DMA may result in limited or restricted access to the gatekeeper’s platforms – e.g. online advertising services on Amazon, Google ads, Facebook ads, or even communication services via WhatsApp or Facebook Messenger – reducing your business’s ability to reach potential customers and generate revenue in the same way you do today.

Final DMA tips for startups and SMEs

While the DMA brings both opportunities and challenges for startups and SMEs, it ultimately sets the stage for a fairer, more secure, and more inclusive digital marketplace. By understanding the obligations, seizing the opportunities, and proactively addressing the challenges, you can position your startup or SME for success.

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Usercentrics (Cookiebot™) does not provide legal advice, and information is provided for educational purposes only. We always recommend engaging qualified legal counsel or privacy specialists regarding data privacy and protection issues and operations.