A brief introduction to ‘platform interoperability’

Our economy is increasingly dependent on platforms that connect different categories of users. It is in a platform’s nature to attract both private and business users due to network effects, as users want to be where other participants already are — buyers seek sellers, sellers seek buyers, and everyone generally benefits from a larger pool of people to interact with. When a company controls such a platform and the platform obtains sufficient market power, questions arise about its obligation to make the platform work with third-party applications, a concept known as platform interoperability.

Two legal frameworks govern this area: the Digital Markets Act (DMA) and Article 102 of the Treaty on the Functioning of the European Union (TFEU), the competition law provision designed to prevent abuse by dominant companies. A European Court of Justice (ECJ) preliminary ruling from this year, the Android Auto case, has altered how Article 102 TFEU is applied in relation to interoperability refusals, with implications for businesses operating in platform markets as well as markets connected to a platform (so-called aftermarkets).

Interoperability requirements – the regulatory landscape

The core aim of the DMA is to prevent certain large digital platforms (‘gatekeepers’) from using their market power by way of ex ante regulation, easing the burden of proof on regulators compared to regular competition rules. The DMA requires companies designated as gatekeepers to make their core platform services (CPS) interoperable with products or services in aftermarkets, free of charge.

Since gatekeeper status must be formally designated in relation to a specific CPS, it is clear to all market participants when a company falls under the scope of the DMA. Competition law, and more specifically Article 102 TFEU, on the other hand, becomes relevant for platforms that are not classified as a CPS, but are found to have a dominant position in the relevant market. The threshold for dominance is less clear-cut than the gatekeeper designation, as dominance must be assessed on a case-by-case basis through market definition and competitive analysis.

In the framework of Article 102 TFEU, situations where a dominant company refuses to allow third-party companies access to the dominant company’s product or service (for example, refusal to meet interoperability demands) are commonly referred to as ‘refusal to supply’ or ‘refusal of access’. As an exception to the normal freedom of contract, the obligation to supply or grant access is governed by strict criteria decided by case law, the so-called Bronner criteria, based on the fundamental principle that infrastructures that are absolutely necessary (‘indispensable’) to third-party operations must in certain limited circumstances be made available for use, as this promotes competition and ultimately benefits consumers.

The indispensability criterion places high demands on third-party companies as they, in order to gain access to the infrastructure, must demonstrate that it is indispensable to their business and that there are no other viable options. However, over the years, the ECJ has limited the situations where the Bronner indispensability criterion applies, and more recently, the scope appears to have been narrowed further in the Android Auto case.  

The shift brought about by the Android Auto case

The case concerned Google’s Android Auto platform, which connects mobile devices to car infotainment screens. When Google initially did not make the platform interoperable with Enel X Italia’s electric vehicle charging app, as Google initially limited compatibility to multimedia and messaging apps only, the Italian competition authority found this refusal constituted an abuse of dominance. As mentioned earlier, interoperability obligations in the DMA only cover a gatekeeper’s CPS. This explains why the DMA did not apply in the Android Auto case. Whilst Google had gatekeeper status in relation to other CPS’, the Android Auto platform did not constitute a CPS covered by gatekeeper responsibilities. Eventually, the case reached the ECJ to determine whether such a refusal to grant interoperability was in violation of Article 102 TFEU.[1]

The ECJ’s preliminary ruling established that a refusal to ensure interoperability can constitute an abuse of a dominant position without the indispensability criterion from Bronner being met. The ECJ held that such a refusal by a dominant undertaking that has developed a digital platform that is interoperable with some third-party apps (i.e., an open platform) is capable of constituting abuse even though that platform is not indispensable for the commercial operation of the app that demands interoperability, but simply makes it more attractive to consumers. Making the platform interoperable would not, according to the ECJ, affect the incentives that led to its development, which is why the ECJ could not justify the use of the indispensability criterion, neither with reference to freedom of contract nor innovation.

It is interesting to note how the ECJ arrived at the conclusion that the Android Auto platform was developed with the intention of being open. The ECJ stated that a platform’s purpose of being open can be ‘evidenced by the fact that that undertaking in a dominant position has already granted such access to such third-party undertakings’. While this may appear to be a straightforward conclusion, it does not necessarily follow that just because a platform is open to third parties, this was the purpose when the platform was originally developed. This reasoning therefore risks being somewhat hasty and may lead to potential problems, as discussed at the end of the article.

The ECJ further held that a potential interoperability refusal may be justified on the grounds of security or if it is technically impossible to establish interoperability. These reasons constitute legitimate grounds for platform operators to refuse requests for interoperability. For comparison, the DMA contains similar safeguards, which allow gatekeepers to take strictly necessary and proportionate measures to protect the integrity and security of the system, provided that these measures are justified. The ECJ also stated that, in the absence of acceptable reasons, the dominant company must ensure interoperability within a reasonable timeframe and in return for possible financial compensation. This contrasts with the obligation under the DMA to provide interoperability free of charge.

Potential market and business implications

A concern arising from the ECJ’s method of determining a platform's purpose is the perverse incentive it may create for dominant companies. The judgment risks reducing the incentive to open platforms to a number of, or a group of, identified third parties, in order to avoid having to open them up to all third parties. Such limitations are well-known in IP licensing, for example, field-of-use limitations. In practice, allowing selective IP licensing can increase competition by enabling market entry that would otherwise be commercially unviable. For example, a developer may lack the resources or expertise to serve multiple markets simultaneously. However, by selectively licensing the technology to different parties for specific uses, innovation can be driven forward, and competition can increase in multiple markets, rather than the technology being limited to a single application or market. However, the Android Auto ruling suggests that this type of flexibility has been reduced for dominant platforms.

Consider a scenario where a dominant company initially develops a platform for its own use, but later decides to selectively open it up to certain third-party companies because it shows commercially advantageous to engage in such collaborations. Such selective opening could be argued to be pro-competitive, as it expands the group of users who can benefit from the platform whilst allowing the platform owner to manage risks and maintain quality standards, much like the field-of-use restrictions in IP licensing that enable broader technology dissemination. Under the Android Auto reasoning, however, the mere fact that the platform is now open to some third parties would be taken as confirmation that it was developed with the intention of enabling third-party companies to use it — even though this was not the original purpose — and any further selectivity in granting access may constitute abuse.

This can create a problematic dynamic, as dominant companies may become reluctant to experiment with selective openness or develop their business models towards increased collaboration, fearing that third-party access will trigger access obligations. This leaves a world where there are only closed-loop platforms or open platforms, but no variations in between. A possible response for a dominant company seeking to avoid Article 102 TFEU liability would therefore be to keep platforms entirely closed, even when opening them to selected partners would be commercially beneficial and pro-competitive. In the long run, this may push development towards closed digital ecosystems, which could stifle innovation and negatively impact competition and end users — the opposite outcome of what competition law seeks to achieve. Nevertheless, considering the commercial benefits that typically flow from platform openness rather than closure, this risk may be overstated. We do not know the conclusion the ECJ would have reached had it regarded a platform that was open only to a few aftermarket businesses, for reasons other than those in the Android Auto case. Hopefully, time will tell.

What platform operators should consider

• Understand the shifting legal landscape: The high threshold of the Bronner criteria is no longer a feasible defense for a refusal to grant access to platforms that are open to some third parties.

• Assess your regulatory position: If your platform is not a CPS under the DMA, examine whether it might hold a dominant position on the market under Article 102 TFEU. The DMA provides clear thresholds for gatekeeper designation, whilst dominance under competition law requires a more nuanced market analysis.

• Document your platform's purpose: If access has already been granted to some third parties, courts may conclude the platform was designed to be open, triggering broader access obligations under Article 102 TFEU.

• Develop clear justification frameworks: Security concerns and technical impossibility are recognised grounds for refusing access under Article 102 TFEU, but these must be genuine and well-documented.

• Establish transparent interoperability policies: Consider developing clear policies about when and how interoperability will be granted, including transparent pricing structures. Remember that whilst the DMA requires free interoperability for a gatekeeper's CPS, Article 102 TFEU allows for reasonable financial compensation. 

If you need more information or further guidance in this area, please contact Morten Nissen or Rakel Rosshagen. 

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