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Through DMA regulations, the EU risks straying into the territory of a market which penalises success, Irakli Machaidze writes.
The European Union’s Digital Markets Act (DMA) should have been a game-changer in Europe’s quest to tame the titans of cyberspace.
However, now that the DMA has come into force, it looks set to stumble into the same pitfalls as past EU endeavours.
Brussels has once again cast too wide a regulatory net, strangling competition and innovation and leaving consumers scratching their heads in frustration.
The EU hopes cracking down on tech giants, the gatekeepers of our digital world, will open the floodgates to competition, innovation, and better deals for consumers. But history tells a different tale.
We have witnessed countless instances where EU overregulation has crippled competitiveness across industries, including GDPR, electric vehicles, AI regulations, and many more.
Wielding more far-reaching regulations like the DMA in the battle against big tech could cut both ways, becoming a double-edged sword with unintended consequences.
Does all of it really work in practice?
The EU Digital Markets Act has its sights set squarely on major US tech titans like Apple, Amazon, Meta, and Microsoft.
These companies, designated as “gatekeepers”, are now under scrutiny to ensure they play fair, refraining from giving their own services preferential treatment over competitors on their platforms.
Google, for example, can no longer push users into selecting its search engine by default on Android phones during setup. It must present alternatives.
In one particularly stark example of the new rules, Google Maps is no longer directly accessible through Google Search, to the ire of many users who enjoyed the convenience of a clickable map appearing in their search results.
Apple services are also starting to look different in the EU thanks to new rules under the DMA. Apple is now required to open up iPhones to alternative app stores for the first time.
Messaging apps like Meta’s Messenger are being pushed to play nice, too, by making their services compatible with third-party messaging platforms and asking users’ permission to keep their Facebook account connected to their Messenger account.
In essence, the gatekeepers are now banned from favouring their own products or services on their platforms.
These forced alterations to some of the most popular online services in the world like Messenger and Google Maps represent a significant shift in the online landscape for millions of European users, while other users around the world continue using those apps and websites unchanged.
Under the guise of promoting competition, the EU is dismantling proven systems which have earned their success in the marketplace, potentially disadvantaging successful players and complicating life for consumers.
Brace for daily turbulence
The effects of the DMA are already stretching far beyond the gatekeepers. Because countless other companies rely on those tech giants to direct consumers to them, hurting Google trickles down into other businesses.
For instance, according to Mirai, one of the leading international partner organisations for hoteliers, results following changes to Google Hotel Ads paint a bleak picture of the impact of the DMA.
In the EU, clicks and bookings on hotel websites have plummeted by 30%, while the share of total bookings coming from Google Hotel Ads has seen a 2.1% drop compared to previous months.
In contrast, the global trend shows a 1% increase, highlighting a stark contrast in fortunes. The hotel industry’s online traffic, an important source of business, is buckling after just a few months of DMA enforcement.
A recent study on the DMA highlights a troubling reality: even if gatekeepers comply with its regulations, consumers could end up bearing the brunt of the fallout.
Anticipated shifts in prices, service quality, and options may burden consumers with increased time costs, distorting market competition. Such protective measures could ultimately backfire, leaving companies raised in sheltered environments struggling to compete on a global scale.
Moreover, the DMA’s long-term impact on global competitiveness remains uncertain, potentially hindering EU-based firms on the world stage.
Brace for daily turbulence: prices soaring, options shrinking, quality sinking, and costs rising, as consumers grapple with new terms and data obligations.
Dethroning these stock market darlings could send shockwaves through the finances of everyday folks, undermining the law’s intended protection.
Regulation comes with (unintended) consequences
Moving forward, it is imperative for policymakers to address uncertainties and challenges surrounding the implementation of the DMA.
To promote transparency and effectiveness, there should be thorough scrutiny and review processes in place, ensuring that regulations strike a balance between fostering innovation, competition, and consumer protection.
Policymakers must also consider the potential unintended consequences of overregulation, particularly regarding its impact on global competitiveness and consumer choice.
Moreover, efforts should be made to enhance clarity and adaptability in regulatory frameworks, minimising ambiguity and maximising their effectiveness in achieving their intended goals.
As the EU balances nurturing fair competition and inadvertently squashing it, both consumers and industry are watching closely.
European policymaking and politicking have a profound impact on consumers’ daily digital lives. Through DMA regulations, the EU risks straying into the territory of a market which penalises success.
Irakli Machaidze is a Georgian political writer, analytical journalist and fellow with Young Voices Europe, specialising in EU policy and regional security in Europe.
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