Digital Markets Act Enforcement at a Crossroads: Avoiding Overreach and Ensuring Progress
Main takeaways
- Enforcement and implementation of the Digital Markets Act enters an uncertain phase
- Europe must resist politicising the DMA or turning it into an industrial policy tool
- The wider digital economy is under serious threat if the DMA is used to forcefully change the way businesses and consumers engage online
The Digital Markets Act (DMA) is creating unprecedented shifts in Europe’s online economy and the wider digital sphere. The DMA designates certain large digital companies as ‘gatekeepers’ – who face additional obligations and restrictions. With the incoming European Commission soon taking office, we are now looking at a new stage for DMA implementation: one where the outcomes are uncertain.
The original intent behind the DMA was to foster contestability and fairness, as well as promoting innovation. Yet, its implementation is resulting in fundamental questions about the types of trade-offs that are needed for it to succeed. These are trade-offs that risk impacting users, businesses of all sizes (including non-gatekeepers and DMA access seekers), and the broader European economy. As I said from the start, the DMA is not about gatekeepers, but about the digital sector as a whole, and it will impact every other sector.
1. Biggest engineering challenges ever
DMA compliance has created some of the most significant, costly and time consuming engineering challenges for gatekeepers in their history. Having been present at all of the DMA hearings organised by the Commission myself, I witnessed an unprecedented occurrence where companies were publicly defending their compliance measures in front of competitors, partners, and business stakeholders – watched over by the enforcers.
Many gatekeepers have rolled out entirely new (or had to limit) features for Europeans, revamped complicated and interconnected systems and software, and engaged with enforcers at an unprecedented level of transparency and intensity. Gatekeepers and access seekers are adapting in front of our eyes to a novel and untested new regulatory framework.
In addition to ensuring compliance, the companies targeted by the DMA, along with access seekers, generate billions of euros for the EU economy and sustain hundreds of thousands of jobs across all 27 Member States. Services identified as ‘core platform services’ under the DMA – including app stores and search engines – are essential in empowering businesses (of any size) to expand in the digital realm – facilitating growth, opening up new markets, and cutting costs.
2. Excessive compliance solutions degrade services
Certain companies are trying to weaponise the DMA, to politicise it further and use it in ways not foreseen or intended – such as pushing for excessive compliance solutions that help them or harm competitors. Some of these firms, often not the ones Europe would choose publicly to support, are pressuring EU institutions to mandate changes that would degrade services, drive up costs, and harm consumers and access seekers alike.
There are also market players that publicly advocate for measures that go markedly beyond the scope of the DMA, or that cater to the interests of specific industry players, rather than supporting the broad digital market. Some pressured the European Parliament to urge the Commission to issue fines ahead of the EU elections, or ahead of other political milestones.
This is a mistake. The DMA was not meant to be judged by creating strong market changes and having huge economic impacts on companies. As I mentioned, this impacts every sector. Many European countries depend on their hospitality, hotel, restaurant and retail sectors as core economic drivers. If there’s suddenly pressure to redirect users not only to app developers’ websites but to any third-party websites, and even encourage them to download content from fully unvetted third-party sources, the outcomes are uncertain.
The DMA was meant to help give people more choice and information. We seem to have forgotten this. If we look at examples that translate to our daily lives, we see that certain aggregators are trying to redesign search engine services to disregard what European users might actually want.
While at a first glance some of the new types of choices look user-friendly, they immediately introduce significant new risks, including security. One stark example is to imagine a website that would direct elderly unsuspecting users to download third-party content onto their smartphones. Until now these vulnerable users had a clear presumption of safety. Now there are new opportunities for malicious actors to exploit these unsuspecting users.
It also imposes new liability on platforms and services, for something they know is dangerous, yet can no longer prevent. This dual challenge will further undermine the digital economy and the user experience for consumers. This was never the DMA’s intention.
3. Forcing businesses to build with limitations
The key challenge lies in finding a workable balance between contestability for rivals of the biggest companies and fairness for business users, on the one hand, and safeguarding the security of users and allowing innovation to thrive on the other hand. Taking an adversarial stance could lead to overly rigid and prescriptive regulatory measures, potentially limiting the accessibility, diversity, and quality of digital services used by Europeans.
If Europeans only have access to second best, or even worse, then this will accelerate the already growing gap in tech adoption in Europe compared to other global economies. If we want to boost our competitiveness, hampering our ability to compete is not the solution. Forcing our businesses to build with limitations simply won’t lead to ambitious growth.
The Digital Markets Act should avoid imposing unnecessary obstacles through excessive over-interpretation or overreach. Indeed, DMA enforcement must not hinder innovation or restrict European users’ access to secure, high-quality digital services. If it does, it risks harming virtually every part of our economy negatively.
Conclusion
What Europe really needs is actually quite simple. It’s what the DMA originally was intended to foster: a collaborative approach, where policymakers work with companies to craft practical and proportionate solutions. By carefully weighing trade-offs and striking a balance – between the needs of users, businesses, and the broader economy – Europe can promote choice and digital growth while safeguarding user trust and security.
Ultimately, the DMA discussion should be about protecting the dynamism of Europe’s digital sector. Next year, CCIA Europe will be putting out concrete guidance on how this can be achieved with successful implementation that is mindful of its impacts and keeps users safe.
To grow again after years of decline, we need a balanced, forward-thinking regulatory approach, rather than politicised regulatory overreach. Europe’s digital ambitions deserve better than imposed mediocrity.
