Understanding the Digital Markets Act

Abstract

In September 2022, the European Union (EU) legislature adopted the Digital Markets Act (DMA)—a landmark piece of regulation with the potential to transform the digital economy in Europe and beyond. Even after adoption, however, questions remain about its stated goals, underlying assumptions, scope, obligations, and eventual effectiveness. This article examines these questions using EU competition law not as a touchstone but as a reference point. First, the DMA’s goals of “fairness” and “contestability” can be more accurately restated as the protection of intra-platform and the promotion of inter-platform competition. Second, the DMA is based on the idea that the enforcement of the abuse of dominance provision, Article 102 Treaty on the Functioning of the European Union (TFEU), is ineffective both procedurally (due to lengthy investigations and remedial issues) and substantively (due to the difficulty of establishing dominance and abuse)—two assumptions that must be tested by examining competition law’s track record. Third, the scope of the DMA is built around the concept of “gatekeepers,” which are in turn defined based on turnover, market capitalization, and active users. Is this an application of the resurgent “big is bad” ideology or a proxy for market power? Fourth, the DMA imposes a list of dos and don’ts on gatekeepers, many of which are inspired by past or ongoing antitrust investigations. Does this experience justify the far-reaching obligations and if so, are they sufficiently flexible to allow for procompetitive gatekeeper conduct? Finally, the DMA is based on the idea that large online platforms have not continued to deliver the desired innovation outcomes and have reaped more than their fair share of the rewards from the innovation they brought. This assumption is tested by a historical look at Apple’s App Store—the most important innovation platform to arise in the digital economy.

Keywords: Digital Markets Act, fairness, contestability, abuse of dominance, gatekeepers

JEL Classification: K20, K21, K23, L41, L43