What impact is the Digital Markets Act having?

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Can the EU curb tech giants’ dominance of the digital marketplace? It’s trying to, with the introduction of the Digital Markets Act, or DMA, a groundbreaking piece of legislation it began enforcing in March this year. The aim is to improve consumer choice and open up markets for European start-ups to flourish.

The legislation forbids tech giants from anti-competitive behaviour, such as favouring their own products and services over competitors on their own platforms. It’s also looking to stop non-compliant behaviour before it takes hold. The EU is targeting what it calls gatekeepers, defined by the law as platforms with a market cap above 75bn euros, more than 45mn active monthly users in the EU, an annual turnover of more than 7.5bn euros.

So far, it’s designated seven gatekeepers, Google’s parent company, Alphabet, Microsoft, Apple, Amazon, Meta, ByteDance, and booking.com. Apple and Meta have already been found in breach of the DMA. If non-compliance continues, the law grants European regulators extraordinary powers of enforcement. This includes fines of up to 20 per centt of total worldwide annual turnover for repeat infringements, which could cost companies billions. As a last resort option, regulators could even force structural changes such as the break-up of businesses.

The act has had a visible effect. For example, Apple is allowing alternative app stores on its operating system in the EU. Google has said it will stop showing its flight search service in its search results in the bloc and will give rival comparison sites more prominence. But there have also been signs the act could limit choice for European consumers.

Last year, Meta released its Twitter-like service threads into the EU five months after other parts of the world due to what it called regulatory uncertainty. The big tech companies have been adept in the past at redesigning their services to sidestep regulations. They also have virtually unlimited resources to fight them. So the question may well be whether EU regulators are willing to entertain the nuclear option of breaking up companies that repeatedly break the law with the fallout that would bring.