Insight
Taming ‘Big Tech’: How the Digital Markets Act should identify gatekeepers by Zach Meyers, 4 May 2021
The European Commission is rushing to impose new rules on large digital platforms. A more careful approach would benefit European digital businesses. Policy-makers and competition authorities increasingly believe that many of the world’s largest technology firms are abusing their dominant positions to stifle competition and treat their customers unfairly. The European Commission is among them. It has repeatedly fined large technology firms such as Microsoft and Alphabet (the parent company of Google) for anti-competitive behaviour and it has opened investigations into others. Recently, the EU’s Competition Policy for the Digital Era report and an independent review commissioned by the UK government concluded that some large technology firms’ market positions were deeply entrenched. At least some of the Commission’s concerns are well-founded. Disruption in some of those firms’ core markets has not occurred for many years: Google has had a market share of 89 per cent or more in online search (measured by the number of times a user clicks on a search result) since at least 2009, for example. The risk of disruptive new market players, therefore, might no longer be sufficient to pressure large technology firms to keep delivering value for users. This poses a potential problem for Europe. The entrenched firms tend to be US-based digital platforms, which provide infrastructure that European digital businesses rely on: app developers need app stores to distribute software; retailers use social networks and search engines to advertise; and merchants use digital marketplaces to list their products. In some cases, European digital businesses also compete with tech giants: for example, countless European companies sell their products on Amazon’s marketplace, in competition with Amazon’s own products (about 50 per cent of Amazon sales are made directly by independent businesses); and Spotify, a Swedish company, relies on the Apple app store to make its app accessible to iPhone users, in competition with Apple’s own music streaming service. If large, mostly non-European, technology firms are entrenched in their core markets, they could make it more difficult for new platforms to compete and might treat European businesses which use their platforms unfairly. To solve this problem, the European Commission has proposed new competition rules for digital markets. The Digital Markets Act (DMA) hopes to change the behaviour of large technology firms by CER INSIGHT: Taming ‘Big Tech’: How the Digital Markets Act should identify gatekeepers 4 May 2021
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