Online travel marketplace, Booking.com, has been designated a ‘gatekeeper’ company by the EU under its new Digital Markets Act (DMA) competition law, meaning that Booking.com now has six months to comply.
Gatekeepers?
Under the EU’s new Digital Markets Act (DMA), ‘gatekeepers’ are large digital platforms that play a pivotal role in the digital economy. They are judged as acting as intermediaries between businesses and users, i.e. controlling key ‘gateways’ through which businesses reach consumers. The DMA, which is aimed at tackling monopolising practices and ensuring fair and open digital markets, sets specific criteria to identify these gatekeepers and imposes obligations and prohibitions on them to prevent anti-competitive practices.
Why Booking.com?
According to the DMA rules, ‘gatekeepers’ are companies within the EU with more than 45 million monthly end users, more than 10,000 business users per year, and a market cap of at least €75bn.
It seems, therefore, that following a self-assessment (submitted on March 1), the EC has decided that the Booking.com travel platform meets the DMA thresholds and, therefore, is now considered to be an “important gateway between businesses and consumers.”
Thierry Bretton, EU Commissioner for Internal Market, has been reported as saying: “Booking is an important player in the European tourism ecosystem and is now also a designated gatekeeper.”
What Does This Mean For Booking.com?
As a gatekeeper, Booking.com now faces specific obligations under the DMA to ensure fair competition and prevent anti-competitive practices. These include:
– Data usage restrictions. Booking.com cannot, for example, use data from business users (e.g. hotels) to compete against them.
– Interoperability. It must allow third parties to interoperate with its services, providing necessary technical access.
– Advertising transparency. Booking.com must offer advertisers and publishers access to performance measurement tools for independent ad verification.
– An anti-tying and bundling obligation means no additional services as a condition for accessing its platform.
– Access to data. Booking.com must provide business users with access to the data they generate on the platform.
– Fair treatment. The company can’t favour its own services or products in search rankings over third-party offerings.
Practical Implications
There are also some practical implications for Booking.com, including:
– Operational adjustments which include significant changes to internal operations, data management, and platform functionalities.
– Increased transparency, e.g. enhanced transparency in ranking, data usage, and advertising charges.
– Additional legal, administrative, and technological expenses to ensure compliance.
– A change to its competitive landscape as the restrictions under the DMA may reduce competitive advantages, levelling the playing field for smaller competitors.
– Increased regulatory scrutiny such as monitoring plus potential penalties from the European Commission for non-compliance.
What Happens If It Doesn’t Comply?
Booking.com now has 6 months to comply but if it doesn’t, it could be facing eye-watering fines of up to 10 per cent of its total worldwide annual turnover, increasing to 20 per cent for repeat offences. Also, it could face periodic penalties up to 5 per cent of its average daily turnover for specific non-compliance issues. To put this in perspective, Booking.com (as part of Booking Holdings) reported a total worldwide turnover of $21.3 billion in 2023.
It’s understood that Booking.com and other gatekeepers have already started implementing measures to comply with their gatekeeper obligations under the DMA and are required to submit detailed compliance reports to the European Commission. However, other companies, like ByteDance (TikTok’s owner) and Meta, have contested their gatekeeper designations
Who Are The Other Gatekeepers?
In addition to the aforementioned ByteDance, Meta, and now Booking.com, other well-known gatekeepers include (not surprisingly) Alphabet (Google), Apple, Amazon, and Microsoft.
Following X’s claim (submitted on 1 March 2024) that, despite meeting the thresholds, it doesn’t qualify as an important gateway between businesses and consumers, it’s understood that the European Commission has opened a market investigation to further assess X’s rebuttal.
What Does This Mean For Your Business?
The designation of Booking.com as a gatekeeper under the EU’s Digital Markets Act (DMA) represents another significant shift in the regulatory landscape for large digital platforms. For Booking.com, this means it must adhere to stringent new rules aimed at ensuring fair competition and preventing the misuse of its market power. This could, however, involve substantial operational adjustments.
For competitors and markets, the DMA’s enforcement may lead to a more balanced competitive environment. Smaller businesses/competitors and new entrants may, for example, find it easier to compete if the ‘gatekeepers’ like Booking.com are restricted from engaging in the many possible anti-competitive practices, e.g. data misuse and unfair bundling of services. This could, of course, foster greater innovation and diversity in the market, as barriers to entry are lowered and smaller companies gain more opportunities to attract customers.
Consumers are also likely to benefit from the DMA’s regulations. For example, with increased transparency in how services are ranked and advertised, they may be able to make more informed choices. The DMA’s requirement for fair treatment and data access may mean that consumers see a wider variety of options and potentially lower prices as competition increases. Also, enhanced data protection measures could help safeguard consumer information, addressing privacy concerns that have become increasingly prominent in the digital age.
Overall, the implementation of the DMA and the compliance efforts by gatekeepers like Booking.com may signal a transformative period for digital markets. UK businesses operating within these markets should prepare for changes in competitive dynamics and be ready to leverage new opportunities that arise from a potentially more equitable digital ecosystem.