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Introduction

Nigeria is introducing a significant regulatory framework for its digital economy with the proposed Digital Marketing Regulation Bill, 2024. The bill aims to create a structured environment for digital marketing and related services by introducing a "gatekeeper" regime, modelled closely on the European Union's Digital Markets Act (DMA). It seeks to address competition issues, protect consumers, and promote local content by imposing a set of clear obligations on major digital platforms operating in the country.

Legislative Status

The Digital Marketing Regulation Bill, 2024, was introduced for its first reading in the House of Representatives on 22 May 2024. It is currently awaiting its second reading.

Scope and Application

The bill applies broadly to the entire digital market operating within Nigeria, including on any Nigerian-registered ship or aircraft. Its core focus is on regulating "core platform services," which include online intermediation services, search engines, social networks, video-sharing platforms, cloud computing, and online advertising services. The central concept of the bill is the "gatekeeper," an undertaking that has a significant market impact and serves as an important gateway for business users to reach end-users.

Regulatory Oversight and the Gatekeeper Regime

The Nigerian Communications Commission (NCC) is designated as the primary regulator responsible for enforcing the bill. Its key powers include:

• The NCC will be responsible for identifying and formally designating companies as gatekeepers based on specific criteria.
• The NCC will oversee digital marketing exchanges and conduct regular audits and market investigations to monitor compliance.
• The Commission will grant and renew digital marketing licences.

An undertaking is presumed to be a gatekeeper if it meets certain thresholds, such as achieving an annual turnover of N5 billion or more in the last three financial years while also providing the same core platform service in another West African country, and having at least 10 million monthly active end-users in West Africa. Even if these thresholds are not met, the NCC can still designate a company as a gatekeeper based on qualitative factors, such as its size, market position, network effects, and data-driven advantages.

Key Obligations for Gatekeepers

Once designated, a gatekeeper must comply with a series of obligations aimed at ensuring fair competition and user choice. These include prohibitions and affirmative duties:

Prohibitions

• Gatekeepers are prohibited from combining personal data from a core platform service with data from their other services or third-party services without explicit user consent. They cannot cross-use personal data between different services or automatically sign users into multiple services to combine data.
• If a user refuses or withdraws consent for data combination, the gatekeeper cannot request it again for the same purpose within a one-year period.

Affirmative Obligations 

• Gatekeepers must allow third-party services to interoperate with their own and provide transparent access to user-generated data, while ensuring privacy.
• They are required to allocate a portion of their platform's space to content creators in Nigeria.
• Gatekeepers must allow users to easily switch between default apps and alternative services.

Intersection with Existing Advertising Framework (ARCON Act)

The bill introduces a new layer of regulation that will directly interact with the existing framework governed by the Advertising Regulatory Council of Nigeria (ARCON) Act, 2022. This creates both potential for conflict and opportunities for synergy

ARCON has a broad mandate to regulate all forms of advertising, including digital and online advertising. The ARCON Act and the Nigerian Code of Advertising require pre-approval for all advertisements before they are published or broadcast to the public. The Digital Marketing Bill, by granting the NCC authority to supervise "digital marketing exchanges" and issue licences, creates a clear jurisdictional overlap. It is unclear how the NCC's ex-ante regulation of gatekeepers will align with ARCON's existing pre-vetting process for individual advertisements. This could lead to a situation where a digital platform is licensed by the NCC, but the advertisements it carries are still subject to separate approval by ARCON, creating a dual-layered and potentially conflicting compliance burden.

On the other hand, the two frameworks can be seen as complementary. ARCON’s focus is primarily on the content of advertisements—ensuring they are legal, decent, and truthful. The bill focuses on the market structure, addressing the conduct of dominant platforms to ensure fair competition. The data protection obligations in the bill, for example, reinforce the data protection principles outlined in ARCON’s Code of Advertising. If the two regulators collaborate effectively, they could create a comprehensive regulatory ecosystem that addresses both market power and advertising content.

Practical Implications for the Ecosystem

The bill's introduction is set to have far-reaching effects on various stakeholders in Nigeria's digital economy:

• Designated platforms will face substantial compliance obligations, requiring significant investment in re-architecting their systems to ensure data separation, facilitate interoperability, and redesign user consent mechanisms. The high-stakes, tiered penalty system will necessitate dedicated legal and compliance resources to navigate the new regulatory landscape.
• The provisions on interoperability and user choice could create significant opportunities for growth. Local start-ups could develop services that integrate with dominant platforms, potentially reaching a wider audience than was previously possible.
• The local content mandate is a potential game-changer for Nigerian creators, guaranteeing them visibility on major platforms and potentially opening up new monetisation avenues.
• The legislation empowers users with greater control over their personal data, particularly preventing the seamless combination of data across different services without explicit consent. This enhances individual privacy and autonomy in the digital space.

Penalties for Non-Compliance

The bill introduces a stringent, tiered penalty system for gatekeepers that fail to comply with their obligations:

• First Offence: A query on the operating licence and a formal reprimand.
• Second Offence: Suspension of the operating licence for at least 30 days and a fine of a minimum of 8% of the company's total annual turnover in Nigeria.
• Third Offence: Permanent revocation of the operating licence and potential divestment of assets as determined by the NCC.

Conclusion: A Step Fraught with Implementation Challenges

The bill is an ambitious legislation concerning digital markets. However, its success is far from guaranteed. The designation of a new, powerful regulator in the NCC for digital markets raises significant concerns about jurisdictional clarity, particularly in relation to ARCON. Without a clear mechanism for harmonising their functions, businesses may find themselves caught between conflicting regulatory demands, leading to legal uncertainty and increased compliance costs.

More fundamentally, the bill's design presents two critical risks. Firstly, its focus on regulating specific "core platform services" risks falling into the classic trap of technology-specific legislation. Digital markets are dynamic and fluid; a regulatory framework tied to a fixed list of technologies is likely to become quickly outdated. Secondly, by concentrating exclusively on high-turnover "gatekeepers," the bill may inadvertently create a regulatory blind spot. This approach risks ignoring smaller, niche platforms where significant user harm and anti-competitive practices can still fester, a lesson learned from past failures in online safety regulation globally. A more resilient, future-proof approach would focus on regulating anti-competitive outcomes and harmful conduct across the entire market, regardless of the platform's size or the specific technology used.

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