06 September 2023

Bruegel: The Digital Markets Act is about enabling rights, not obliging changes in market conditions

Europe’s new digital competition law, the Digital Markets Act (DMA), seeks to tame big tech’s market power by imposing on the digital giants a list of positive and negative obligations. The DMA will give European business users and end users (consumers) new rights in relation to so-called ‘gatekeepers’, or hard to avoid digital companies, including Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, which were designated as gatekeepers by the European Commission on 6 September ¹ . These companies must comply with the obligations from 6 March 2024.

The DMA makes it possible to challenge the gatekeepers and change the market conditions by lowering entry barriers for third-party products and services. However, the DMA does not force users to exercise their rights, nor does it force changes in the market. It empowers users of gatekeepers’ services with new rights and it is this, if those rights are asserted, that could reshape the market.

To ensure effective compliance, it would be beneficial if gatekeepers can provide compliance indicators that prove that measures they have taken to comply with the DMA empower users in line with the DMA obligations. This will allow gatekeepers and the Commission to assess effectiveness over time.

Exercising rights

The DMA is an objective-based regulation to ensure contestability and fairness (Article 1 and Recitals 32 and 33 DMA). Contestability refers to the ability to overcome entry barriers, while fairness refers to the ability to challenge the imbalance between the rights and obligations of gatekeepers and business users by enabling the latter to capture the benefits of their innovations and efforts. End users then benefit because the DMA gives them more choice in terms of using third-party offerings, and more control in relation to gatekeepers’ products. The DMA does this by imposing on gatekeepers a list of 22 positive and negative obligations (Articles 5, 6 and 7 DMA), which apply to 10 core platform services (CPSs), such as online search engines like Google Search (Article 2 DMA) ² .

The European Commission is the sole enforcer of the regulation (Recital 91 DMA). Gatekeepers must prove that the measures they implement empower users, but, critically, not that they produce changes in market conditions (Article 8 DMA). Gatekeepers are thus only responsible for ensuring the new rights can be exercised. Neither the gatekeepers nor the Commission can force market participants to exercise their rights.

For instance, if a gatekeeper properly enables the use of third-party app stores on its operating system (Article 6(4) DMA), but no market participants decide to develop a third-party app store, then a gatekeeper cannot be held responsible for the absence of a change in market conditions. The Commission cannot assume that the gatekeeper has not effectively complied with the DMA obligation.

Gatekeepers must report to the Commission, starting in March 2024, outlining how they comply with the DMA objectives. Reports should include detailed and transparent accounts of the measures they implement to ensure compliance with the list of obligations (Article 11 DMA). But indicators of market changes are unlikely to be required, for the reasons set out below.

The Commission has already issued a draft report template ³ . While this does not yet have a legal effect, it highlights the information gatekeepers must provide for each CPS and each obligation. Among other information, the draft requires gatekeepers to provide outcome indicators about changes in market conditions, such as data on the evolution of the number of active end users and active business users for the relevant CPS. However, these indicators are not fully informative about whether gatekeepers effectively comply with the DMA. There is, therefore, a need for compliance indicators that do not rely on outcomes....

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