The EU’s Digital Markets Act (DMA) which took full effect on March 7, 2024, aims a potent new weapon at Big Tech, most notably American companies like Apple, Google, Meta, Microsoft, and Amazon. All of these companies, plus the Chinese ByteDance (TikTok) have been labeled by the EU as “Gatekeepers” who must adhere to the strict competition rules under the DMA .
Immediately after the March 7th effective date of the DMA, the EU Commission announced that it would be taking aggressive action toward enforcement. Then, on March 25th, the Commission announced that it already is launching investigations of noncompliance by Apple, Google (Alphabet), Facebook (Meta). The Commission also hinted at the possible future investigation of Amazon.
Taking a close look at the text of the DMA, it is apparent that one of the primary motivations for such is to give European tech a boost to catch up with the US. Replete throughout the DMA are references to the concept of “contestability.” Contestability is not defined in the DMA, but generally refers to the ease of entry into a market to compete with the existing players.
Obviously, the ability of any company to compete with the core businesses dominated by large tech companies is virtually impossible. This puts Europe in a difficult position insofar as it seeks to compete in the digital economy of the future. Unlike established competition (antitrust) law in Europe and the U.S., the DMA legislation unabashedly targets specific American companies, and the EU has recently passed other legislation like the Digital Services Act, which primarily targets large American tech companies.
It is no secret that the EU is the most aggressive regulator of Big Tech, and it is widely believed that one of the EU’s motivating factors in doing so is to promote its own tech sector.
Perhaps it is too late in the game for any company – be it European, American or Asian – to compete with the core businesses of Apple, Google, Microsoft or Amazon. But the focus of the DMA is to hinder the efforts of the tech giants to use their “Gateway” status to protect their less established businesses from unfettered competition. For example, Apple has been consistently accused of using unfair methods in its App Store to stifle competition for apps it owns or favors. Google has been accused of using its search engine to promote products it owns or favors.
Traditional antitrust laws like the Sherman Antitrust Act in the U.S. and Articles 101 and 102 of the Treaty on the Functioning of the EU (the “TFEU”) already provided strong legal tools to challenge such “abuses” of monopoly power. The U.S. DOJ and FTC currently are pursuing antitrust cases against Apple, Amazon, Google and Meta. TFEU Article 102 was recently used to impose a $2 billion fine on Apple.
However, the DMA provides an even more powerful weapon for the EU to use against big tech, as it sets forth a long list of specific practices specific to big tech companies that are deemed to be unlawful and anticompetitive.
The DMA will be a valuable tool for the EU to force change on the business practices of big American tech companies. These changes should allow more competition, at least with respect to products and services that are peripheral to the tech giants’ core businesses.
Even if the DMA is designed to help European companies to compete in the global digital economy, the law ultimately should benefit small to medium sized tech companies worldwide, including those based in the U.S. It should allow them to sell their products and services on the big Gateway platforms on a fairer and more level playing field than has existed.
European tech companies will still need to outperform American companies in providing high quality products and services that consumers want. But, even if the DMA is intended to favor the European tech sector at the expense of American tech dominance, consumers from around the world should benefit from the increased menu of products and competition.
Member discussion: