The European Parliament and the Council are currently discussing the Digital Markets Act (DMA), a proposed regulation that attempts to regulate large online platforms such as Google, Amazon and Facebook in order to “ensure fair and open digital markets, promote alternative digital platforms, improve innovation, reduce prices and help Europe regain a role in the digital economy”.
On 19 February 2021, Nicolas Petit, Professor of European Competition Law, gave a statement to the European Parliament Committee on Internal Markets and Consumer Protection (IMCO) discussing the potential benefits of the Act. Petit argued that while the DMA is an instrument with high economic potential. It will only satisfy its objectives and be a success for the European economy if it meets three conditions. These conditions include: taking a clear European stance, making clear economic policy choices and ensuring that the DMA engages gatekeepers into competition against each other.
Professor Petit argued that the Commission must prevent cross-border fragmentation. “European innovators should spend their resources on product design and user adoption”, he said, “not on trying to make sense of distinct national regimes of competition law for the digital sector.”
Petit also stressed the importance for the DMA to send incentivising market signals. “This cannot be a ‘throw everything at the wall and see what sticks’ policy.” He referred to the historical example of how the 1956 Bell Labs decision to license its patents with AT&T in the US provided a lucid, well-specified and consistent settlement. According to him, the DMA must attempt to do the same if it is to avoid falling prey to Europe’s structural disadvantages and drawn out litigations.
Finally law regulating digital markets should incentivise gatekeepers and large platforms to move away from ‘tipped’ markets (when a product ‘wins’ or monopolises an entire market), and compete instead against other firms in markets that are more ripe for competition. Professor Petit provided the example of how Amazon’s alliance with BMW and Mercedes to integrate its Alexa voice assistant into their automobile design indirectly promoted competition within the automotive industry. It prompted automakers such as Jeep, Ford, Hyundai, Nissan and more to adopt Alexa and other voice-activated assistants within their vehicles.
Petit wrapped up by proposing four concrete steps that the Commission can take to ensure the DMA meets his legislative success. Firstly, the proposal’s language has to reference the DMA’s role as a market power regulator of digital firms. Secondly, it must restructure itself to focus on “gatekeeping rapacious conduct that is not self-defeating in a normal ecosystem.” Next, the act should specify clear economic policy choices that ensures gatekeeper firms are subject to pressure from EU law. Lastly, Petit believes the DMA has to prioritise innovation. “Innovation creates competition, as much as competition creates innovation. The word innovation does not appear once in the articles of the DMA. Though there are limited references to innovation in the preamble, it is primarily treated as a footnote, often as the last word in a long clause where price, quality, choice, fairness come first.”