How the Digital Markets Act will challenge consumers by Zach Meyers
At the end of 2021, the European Parliament agreed on its preferred version of the Digital Markets Act (DMA). The DMA is a set of rules which would regulate big tech companies’ digital platforms to increase competition online. The EU law-making institutions – the Commission, the Council of Ministers representing member-states and the Parliament – are under pressure to finalise the DMA quickly. France’s presidency of the EU began on January 1st, and French President Emmanuel Macron wants the DMA finalised before he runs for re-election in April, to prove to voters he is tough on (American) big tech. The disagreements between law-makers are small, so this timeframe is achievable. Broadly, compared with member-states and the Commission, the Parliament wants the DMA to regulate fewer online platforms; to impose stricter rules on the platforms that it will regulate; and to impose harsher penalties on platforms that do not follow the rules. The Parliament’s proposals, however, could have significant consequences for innovation and for the quality of digital services.
Google’s app stores. It is difficult or impossible for smaller firms to compete against these platforms today. And, instead of competing with each other head-on, big tech firms increasingly co-operate with each other to protect their own core platforms.
The DMA could deliver some modest ‘quick wins’ – such as making mobile apps cheaper by lowering the costs that, say, Apple charges for placements in its app store. But these wins would soon be forgotten if big tech firms became slower to roll out innovations to European consumers.
If the DMA succeeded in making big tech’s core platforms more vulnerable to disruption in Europe, big tech firms would have to work harder to keep improving their services, and they might try harder to dislodge each other. Smaller disruptive firms may also prefer to enter the European market first, rather than other parts of the world where big tech firms would remain more impervious to competition. The DMA could therefore encourage greater spending on research and development, and deliver new innovations for Europeans.
Many of the DMA’s rules target big tech’s core platforms – like Google’s search engine, Facebook’s social networks, and Apple and
The Parliament’s proposals to strengthen the DMA rules targetting big tech’s core platforms are broadly pro-innovation.