[Terms in the News] Failure to Introduce Pre-Registration System, A Look at the EU 'Digital Markets Act'

The government has withdrawn the introduction of the pre-designation system. The 'pre-designation system' is a system that designates major platform operators such as Google and Apple as 'dominant platforms (monopoly operators)' in advance to prohibit unfair practices and regulate them swiftly.

Advanced countries are already strongly regulating the monopolistic practices of major platform operators through the pre-designation system. The European Union (EU) has been enforcing the 'Digital Markets Act (DMA)' since March this year.

The 'Digital Markets Act' is a law that designates platform operators of a certain scale as 'gatekeepers' to prevent abuse of market dominance and imposes special regulations. Gatekeepers include Alphabet (Google's parent company), ByteDance (TikTok's parent company), Amazon, Apple, Meta, Microsoft (MS), and Booking.com. The criteria for gatekeeper designation are companies with a market capitalization of 75 billion euros (approximately 100 trillion won) or annual revenue within Europe of 7.5 billion euros (approximately 10 trillion won) or more. There is also a condition that the monthly number of users of core services such as web browsers, social networking services (SNS), and messaging apps must be at least 45 million.

The EU has imposed separate obligations on about 20 services operated by the seven companies, including operating systems, social media (SNS), search engines, and online advertising services.

Gatekeepers must allow interoperability between their own platforms and third-party services, such as installing external apps and alternative app stores. They are also prohibited from favoring their own services. Prioritizing the exposure of their own services over competitors' services is banned. Additionally, companies operating multiple services such as Google and Meta cannot use personal data obtained from one platform for personalized advertising on another platform without user consent. Companies must regularly report to the EU Commission regarding their services and compliance with regulations. Violations of these obligations can result in fines of up to 10% of the company's global annual revenue. Repeated violations can increase this rate to 20%.

In June, the EU provisionally concluded that Apple's App Store operating practices violated the Digital Markets Act (DMA). This was due to restrictions preventing consumers from choosing cheaper external payment methods. If the EU makes a final conclusion that Apple violated the Digital Markets Act, Apple may face fines amounting to 10% of its global sales.

The United Kingdom will implement the Digital Markets, Competition and Consumer Act (DMCC) by the end of this year. It is similar to the 'Digital Markets Act.' Japan proposed the 'Regulatory Act for Revitalizing the Telecommunications Market' this year. The scope of application covers operating systems such as smartphones and PCs. The regulation targets are expected to include Google and Apple.