The Digital Markets Act requires the largest tech companies, almost exclusively American, to overhaul how their products work so smaller rivals can compete.
Under the law, Apple must reduce fees to its app stores and give rivals access to its IOS operating system. Google must stop favoring its own products in search engines. Meta may have to offer a free, ad-free service. European regulators have already fined Apple and Meta hundreds of millions of euros and are reportedly preparing to hit Google for noncompliance.
Not surprisingly, the DMA infuriates much of Washington and Silicon Valley. Tech “gatekeepers” are slowing the rollout of new products in Europe, arguing that DMA-imposed changes degrade them – and threaten privacy and security. Competitors demand strengthened enforcement. And in an ironic and unintended sideshow, the gatekeepers themselves are leveraging the law to spar with each other.
The criticism from all sides underlines just how difficult it will be for regulators to promote competition using a rulebook. Instead of regulation, the marketplace offers the biggest opportunity for change: a slew of artificial intelligence entrants led by OpenAI and its ChatGPT are challenging the incumbents more than European regulation.
The European Commission is now evaluating the DMA’s effectiveness; it closed a consultation last month. “Time for a reset,” Google’s competition lead, Oliver Bethell, wrote in a blog post. Apple went further, calling for repeal. That’s unlikely. “Not surprised; “Apple has simply contested every little bit of the DMA since its entry into the application.” Commission spokesperson Thomas Regnier responded.
Instead of repealing, the Commission looks poised to expand the law. It added a section in its DMA consultation about the impact of AI and could bring in scope previously exempt markets, starting with cloud computing.
Zoom out, and it becomes clear that the DMA represents a broad global trend. Countries from Japan to the UK have adopted their own versions of the DMA. Even though the US has refrained from legislating, successive administrations have continued federal antitrust cases against Apple, Amazon, Meta, and Google, demanding the companies not only change their business practices, but often be broken up.
The DMA allows European regulators to move faster than traditional antitrust cases that stretch out for years, even a decade or more. Companies must implement product changes while waiting for regulators to decide whether their compliance plans are sufficient. That’s expensive. Hundreds of thousands of engineering hours have been devoted to DMA-required product modifications.
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Those modifications often degrade products, leading to poor consumer experiences. Since Google can no longer link directly to its own Maps, Europeans searching for a location are directed to a choice of map providers and must make numerous clicks to get directions. And since the DMA requires Google Search to stop showing results that link directly to airline and hotel sites, Alphabet lawyer Bethell says “it raises prices for consumers, reduces traffic to businesses,” causing “revenue losses of up to €114 billion.”
Companies are delaying or even killing European product launches. The DMA requires third-party apps to gain access to Apple’s IOS operating system, creating privacy and security concerns. Apple has postponed allowing Europeans to use Live Translation, saying it needs additional engineering time to keep user conversations private. It also has blocked iPhone Mirroring, which drags and drops photos between devices, because “our teams still have not found a secure way to bring this feature to non-Apple devices without putting all the data on a user’s iPhone at risk.”
As these iconic American companies squirm, Washington seethes. President Donald Trump derides the DMA as a non-tariff barrier to trade and has threatened retaliation. An impasse looms. The EU says it will not dilute the law and is under pressure at home to increase, not decrease, enforcement.
While companies complain about being targeted, competitors, consumers, and digital rights groups say regulators are not being tough enough. The consumer group BEUC worries about “the speed of enforcement.” Spotify, which has been fighting Apple over its app store charges for years, complains that Apple’s proposed changes render “the DMA’s goals of offering more choice and more control to consumers useless.”
Looking forward, it’s unclear how the battles over the DMA will play out. Apple, Google, and Meta are all either appealing or look set to appeal their fines and forced product changes to the European Court of Justice. Trade sanctions cannot be ruled out.
In an effort to defuse tensions and depoliticize enforcement, an independent agency could replace the European Commission in enforcing the rules. Cloud services, left out of the DMA, could be included. The consumer group BEUC wants to see AI added to the list of services covered.
Only one thing is certain: the DMA will continue to generate headlines and tension.
William Echikson is a Non-resident Senior Fellow with the Tech Policy Program and editor of the online tech policy journal Bandwidth at the Center for European Policy Analysis.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy.