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The European Union’s Big Policy Bet Against the Tech Giants

 |  January 3, 2022

By: Philip Hanspach & Nicolas Petit (Oxford Business Law Blog)

At a roundtable in Brussels in May, NYU law Professor Harry First described the European Union’s proposed Digital Markets Act (DMA)—an ambitious regulatory proposal aimed at large platforms identified as ‘gatekeepers’—as ‘81 pages of dense, hard to understand language.’ He half-jokingly added, ‘it is written in English … I know it’s written in English … but it takes some work to go through.’ Professor First’s difficulties with the DMA text raise a simple question: beyond its stated ambition to improve ‘contestability’ and ‘fairness,’ what is the EU concretely trying to achieve in digital markets?

The answer lies in the fine print. According to the DMA, access to data is key to business success in the digital economy. The DMA’s prescriptions invite the idea that imposing data access, interoperability, and mobility obligations on ‘gatekeepers’ can improve rivalry, promote entry, and ultimately innovation. And requiring gatekeepers to silo their data can restore a level playing field with existing and new firms.

So far, so good. There is, indeed, some truth to the idea that ‘data is the new oil.’ But the directions taken in the DMA to implement this idea are based on implicit assumptions about the relationship between data and competition. Possible flaws in these assumptions could compromise the success of the DMA in delivering more ‘contestability’ and ‘fairness.’ They thus deserve to be made explicit and carefully reviewed.

The DMA’s Specific Rivalry Policy

The DMA embodies a specific approach to creating business rivalry through sectoral regulation. First, it wants to improve the competitive potential of ‘business users.’ Perhaps, the DMA believes that data sharing obligations can promote competition between gatekeepers and their business. Business users include sellers on Amazon, advertisers on Google and Facebook, and influencers (or their agencies) in the case of ‘online social networking services’ or ‘video sharing platforms’. Second, the weight of the DMA’s provisions leans towards a preference for disruption through substitutes. The DMA defines gatekeepers’ users in ‘core platform services’ (CPS) as the bottlenecks that rivalrous efforts should contest…