Pros and cons of EU's Digital Markets Act

The groundbreaking Digital Markets Act of the EU is aimed at promoting a fair digital sector in the region. The law has set some major dos and don'ts for the top tech giants. In this article, let's learn what are the pros and cons of this landmark law.

Touted as one of the strictest laws, the Digital Markets Act (DMA) started applying in May this year. With this Digital Markets Act, the EU is set to become the global leader in tech regulation. This act is focused on ensuring dominant tech companies behave fairly online as well as monitoring practices that may hinder new business growth. As defined by the EU Commission, the DMA is a set of common rules on the obligations and responsibilities of intermediaries in the single market and ensures high protection for all EU users regardless of their country of residence.

The DMA will strictly regulate the way intermediaries, especially giant platforms like Google Facebook, Microsoft, Apple, and Amazon work when it comes to moderating user content. Among the new obligations will be to prevent harmful content from spreading, to ban or limit certain user-targeting practices, and to share a certain amount of internal data with regulators and researchers. The rule is currently only applicable to some of the biggest online platforms in the EU, those serving over 45 million Europeans. A firm in violation of the DMA may be fined up to 10% of its global turnover while in the case of repeat offenders, it may also go up to 20% and they could also be banned from further acquisitions in Europe.

Six global tech companies Apple, Amazon, Alphabet, Meta, Microsoft, and Chinese company ByteDance have been placed in the category of 'Gatekeepers' under this new law maximum monitoring will be maintained on these firms. A senior EU official has stated that the time has come to change the rules of the game. We have to make sure that every online platform no matter how big it is should behave properly. The first impact of DMA was seen during the worldwide launch of Meta-owned Instagram Threads. It was reportedly due to the DMA that the launch of the popular app and Twitter rival was delayed in the region. Also, you can't even use the app if you are just traveling to the region. However, Meta did not directly blame the tech regulations for the delay. One of the other biggest changes that the big tech companies have to make to comply with the rules of DMA is Apple may be forced to allow its consumers to download its apps outside of its app store.

This law of the European Union mentions those activities of tech companies that prevent them from capturing new digital markets. The six companies will have to comply with the new digital rules of the EU and thus have been given a time of six months to follow the new rules. There should be a regulation of these gatekeepers as they are too important to leave uncontrolled. The 'gatekeepers' often have the potential to make their own rules because of their size and offerings, resulting in reduced innovation between smaller players and higher prices. Let's have a look at some of the probable pros and cons of the EU's DMA.

Pros of the Digital Markets Act

A key objective of the DMA is to ensure that businesses operating within the EU are on a level playing field concerning global competition and growth. It is important to note here that it can prevent competition when a gatekeeper favors its own services or blocks business users from reaching consumers. The DMA will still allow gatekeepers to innovate and offer new services. In other words, they can not exploit businesses and customers that rely on them by using unfair practices. For example, under the rule, Google must keep search rankings on an equal footing so that their products don't appear at the top of the search results.

The DMA protects and enables new and existing businesses to compete on influential platforms which could drive big tech companies to invest more in Europe. Moreover, DMA will expand opportunities for competition by allowing third parties to interact with gatekeeper services.

All in all, consumers will have more options to get better services. This means services will be more affordable and there will be more chances to switch providers.

Cons of the Digital Market Act

As of now, the DMA has evoked a mixed response. Some experts believe that restricting some of the power of these tech giants and increasing competition will benefit the majority. However, not everyone is on the same page. It is commonly claimed that the law will discourage innovation and consequently lower quality of services. As a fairly complex piece of legislation, DMA will be costly to implement both for the states and for gatekeepers. It could potentially affect the finances of regular people who are supposed to be protected by the law if the big companies were dethroned from their places.

Bottom Line

It is anticipated that the gatekeeper status will take effect within six months of March 2024 which is when the prohibition and obligation of the Digital Markets Act will apply.


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