Digital Markets Act: Competition, Property, Innovation and User Interests

After participating in a November 2021 expert workshop on digital market policy in Vilnius, Lithuania, ITIF’s Aurelien Portuese contributed to the publication of a conference report edited by Dr. Guoda Azguridienė, “Digital Market Act: Competition, Property, Innovation and User Interests” (Lithuanian Free Market Institute, 2022).

Introduction

The Digital Markets Act was released in December 2020 as a Regulation Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector. The European Commission justifies the proposal by the need to avoid regulatory fragmentation in a single market, to create a safer digital space, and to establish a level playing field for businesses having in mind that some large online platforms act as “gatekeepers” in digital markets. Together with the Digital Services Act, the Digital Markets Act is one of the centerpieces of the European digital strategy.

This paper argues that the measures stipulated in the DMA do not match its calls for strengthening of the internal market, more competition, and innovation. The authors of the DMA claim that the Regulation will restrict only big firms, but this paper demonstrates that the enforcement of the proposed regulation will inevitably hurt SMEs and the end-users. The DMA Impact Assessment fails to prove the promised benefits and it underestimates likely losses. It is a source of concern that the proposed regulatory framework neglects some fundamental economic principles and values such as private property rights and presumption of innocence. The digital sector is treated separately from other economic sectors, which is at odds with the consumer perspective. The DMA is an attempt to construct an artificial competition and an artificial market whereby the consumer is left in the background, without their central role.