Time to restore fairness and contestability in digital markets

Andreas Schwab and Pablo Arias Echeverria

In December 2020, the European Commission presented the Digital Markets Act (DMA) and the Digital Services Act (DSA) as “milestones in our journey to make Europe Fit for the Digital Age”, write Andreas Schwab and Pablo Arias Echeverria.

Andreas Schwab is the European Parliament’s rapporteur on contestable and fair markets in the digital sector (Digital Markets Act) and the EPP Group’s Internal Market and Consumer Protection (IMCO) coordinator. Pablo Arias Echeverria is the chair of the EPP IMCO Working Group on DSA/DMA and the deputy coordinator of EPP Group IMCO.

With this, we want to have the European way of shaping the digital revolution with the values of the social market economy model. We can argue that the Big Tech companies undoubtedly contributed to the development of the European digital landscape, but at the same time, their business models have hampered the fair access of consumers and businesses to it. Therefore, with the new laws shaping the digital sphere, we want to give Europeans access to a wide choice of safe products and services online, just like in the physical world. Moreover, businesses in Europe will be enabled to compete freely and in a fair way online, just as they do offline. Our approach is to be neutral and not pick digital winners. We are in favour of transparency, security, accountability, competition, and innovation to make the Digital European Sphere.

We need the DMA and the DSA because a few large tech companies have become enormously powerful. For example, the world’s largest tech company, Apple, is today valued at USD 2.5 trillion – five times the GDP of Belgium. Big Tech’s products and services have re-defined the consumer experience of the internet worldwide. Nevertheless, through their sheer size, Big Tech companies could shape the way markets and products work for everyone – and most often, to their own commercial advantage. Their central position between businesses and consumers make them inevitable for both sides.

Just to give you an example – Google’s dominance over the Android mobile operating system. At its core, Android is open-source (the Android Open Source Project {AOSP}). This means that everyone is allowed to produce their own version of AOSP, an initiative created to guide the development of the Android mobile platform and launch it as a competitor to Google’s Android. However, this is often both legally and technically challenging for competing businesses because of the proprietary layers that Google has built on top of AOSP (Google Play Services). One such layer is the ‘SafetyNet service’ for app developers. It checks if the Android in use on a phone is a Google Android. Google pitches this as a safety provision. But many safety-focused app developers add the SafetyNet component to their app, especially payment providers or banking apps.

While pitched by Google as a safety measure, the SafetyNet has a huge impact on the Android market. Apps that include SafetyNet do not work on any other Android version than Google’s own version. This forces consumers to use Google’s Android version if they wish to use, for example, the most common banking app. Therefore, SafetyNet makes it difficult for competitors to launch a non-Google Android operating system for average consumers because most apps that consumers like would not work. Thereby, SafetyNet allows Google to keep a quasi-monopoly over the Android market. As a solution to this unfair business practice, the DMA will fix this loophole and hopefully create more competition between different versions of Android.

Big Tech companies have shaped the European digital landscape in many positive ways. At the same time, they became inevitable elements of the digital economy through their position between businesses and consumers. But we want to guarantee that these companies do not become the only conduit between businesses and consumers and that they cannot take advantage of their position and preference their own business over their competitors. Therefore, these new rules will regulate such behaviour, restore a level playing field between large companies and small competitors and thereby increase choice and innovation.

Europe must act to promote competition on the merits and free choice for consumers. Otherwise, society will lose out in the long run.

This article was originally published by EURACTIV. Access the original here.

Time to restore fairness and contestability in digital markets
Image credit:
Social Europe, 2021

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