Digital Markets Act: what’s the benefit for European citizens and businesses?

04.05.2022
Raymonde Weyzen
Avis

In March this year, the EU brought forward the proposal for the Digital Market Act (DMA), which will be enforced before the end of this year. The regulation is, together with the Digital Services Act (DSA), part of a duo of legislation designed to increase competition in the European Digital Markets by limiting the power of the big online platforms, which would allow new players to enter the market.

The DMA will compel technology companies like Apple, Meta (Facebook’s parent), Google, and WhatsApp to make their services interoperable so that they can interact with competitor services such as Signal, or Telegram. For instance, Apple will need to allow iPhone users to download their apps from stores other than the App Store, and WhatsApp will need to enable people to use the app to communicate with their contacts who use other messenger services. The regulation would also give users the opportunity to delete pre-installed apps. If companies do not comply with this, they risk fines of up to 20% of their global turnover.

With the act, the Commission, parliament, and European Council treat operating platforms as ‘gatekeepers’ of the market in the sense that they are considered to be a gateway for smaller businesses to reach the end consumer. 1

And, according to the EU institutions, gatekeepers should not give preferential treatment to their own products or promote them over those of competitors. Furthermore, gatekeepers should not be allowed to use users’ personal data from one service for the other (think of targeted advertising) or tell app developers in advance which services must be used to be included in the app store. Instead, the platforms would have to get users' consent before they combine third-party data with their own data (for e.g., targeted ads), and grant app developers "fair access" to smartphone functions.

All in all, the act comprises a substantial set of new rules. But what does it mean for the platforms? And what does it mean for Europeans?

For the end-users, i.e., European citizens, the most noticeable change will be that they have more freedom to choose the applications they want to use, for their own reasons, rather than because of the popularity of the platform. According to Marcel Kolaja, a Czech MEP from the Greens/European Free Alliance group in the European Parliament “citizens don’t necessarily join the service because they think it's the best but because it is the most used and where they find most of their friends or business partners” 2 , which the DMA aims to change. Sounds like a benefit.

For businesses on the other hand, the benefit might be smaller, if not, non-existent. For the online platforms, the downside of the DMA is clear. Yet, surprisingly, smaller companies – if they would want to interoperate with the bigger platform at all – might not even benefit from the DMA.

According to Julia Weiss, spokesperson for the subscription-based messaging app Threema with more than 10 million users: “Interoperability would cement the monopoly of the top dogs, instead of breaking it up. If existing users of free messenger A with bad privacy practices could communicate with users of privacy-conscious paid messenger B, they will not pay money for messenger B, effectively depriving it of its only source of revenue.” 3

Although the DMA, together with the DSA, is designed to level the playing field, to the benefit of smaller companies, it is unsure if it will actually have that effect. For European citizens though, the regulation – yet to take effect – looks great. It gives Europeans a choice again.

Digital Markets Act: what’s the benefit for European citizens and businesses?
Crédit d'image:
Jeremy Bezanger via Unsplash

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