Last week marked the deadline for compliance with the European Union's Digital Markets Act (DMA), which provides ex-ante competition policy regulations for large digital platforms, or “gatekeepers.” US companies such as Alphabet, Amazon, Apple, Meta, and Microsoft, whose various services are designed as “gatekeepers,” as well as China's ByteDance (TikTok's parent company), which has been similarly designated and challenged. , strives to be DMA compliant. designation. Last year, Chairman Scholl's analysis found that the DMA could impose tens of billions of dollars in compliance costs and fines on targeted companies, and possibly impose tens of billions more on customers in the form of increased service costs. concluded that this could tip the playing field in China's favor. platform. So what is changing in Europe? And what are the implications for European consumers and businesses? Also, what will be the impact on competitive dynamics, especially since most of the Chinese platforms are not covered?
Additionally, DMA is not only problematic for technology companies and consumers, it also poses cost and cybersecurity challenges for airlines, hotels, advertisers, brands, European agencies, and consumers. To assess how the costs of these regulations are passed on to European customers, a suggestive survey conducted by the authors with 250 European consumers was conducted. The survey was conducted online from 5 March 2024 to 9 March 2024 among a random sample of 250 European adults from 24 EU countries. This list breaks down the findings by sector.
- Airlines, hotels, restaurants and local services: To meet the DMA and avoid “self-prioritizing” or prioritizing its travel services on Google Search, Google will completely remove the Google Flights feature that aggregates flight information from search pages and will announced that it would be replaced by a group. To third party aggregators. The same goes for Google's hotel comparison tool. This means European consumers have to take extra steps to find flights and hotels. For example, you might search for “flights to Paris” on Google, then click on a link on a site like Kayak or Booking.com.
Hotels in Europe are lobbying against the change, which would favor intermediaries who take commissions on tickets and rooms. Sébastien Bazin, CEO of French hospitality company Accor, said the DMA “requires Google to elevate its booking platform above independent hotels,” which would increase distribution costs for hotels. He pointed out that he is not alone. French senators have warned the European Commission that hotels may raise prices to cover intermediary costs. In a LinkedIn post, hotel booking engine Mirai reported a 30 percent drop in customer clicks and bookings, likely due to an increase in aggregators, although some aggregators have said Google's efforts are I don't think it's enough. A survey of European consumers found that 41% of 250 respondents and 55% of those looking for weekly travel thought the new settings would “take more time” and 35% said ” It turns out that people think that awareness of airline tickets and hotels will decline. Meanwhile, 23% think the opposite.
- Brands and advertisers: Advertisers who want to reach customers with multiple services offered by a company (such as Google Search and Maps) may require additional specific user consent in addition to the users' existing consent to access the various services. must be collected. Without consent, advertisers using Google will not be able to build specific audiences or run personalized advertising campaigns. Many advertisers anticipate that the new rules will reduce the quality of their audiences and viewership and require them to come up with new ways to collect consumer data, such as through inventory data or marketing campaign databases. This can increase customer acquisition costs for brands, especially smaller brands with limited budgets and greater reliance on larger platforms to reach their audiences. And this is the direction at least some of the market is headed. The research found that 47% would not, or probably would not, give this consent, with older users least likely to do so.
- Interlinked synchronization services: The DMA requires gatekeepers to refrain from cross-linking user data on two services like Meta's Instagram and Facebook unless users consent. There are clear implications. For example, Facebook Messenger users cannot use Messenger to communicate with Meta Marketplace users unless the Facebook Messenger users allow this reciprocal link. European consumers aren't necessarily happy. According to the survey, 64 percent of respondents felt that the end of automatic syncing of services complicates their lives “a lot” or “somewhat”, and 87 percent felt that the end of the service's automatic syncing would complicate their lives “a lot” or “somewhat”, and 87 percent said they would, for example, give or be able to give permission to Meta. I think it's sexual. and Google aim to interconnect their services, and he is 35-44 years old most likely to promote interoperability.
- Cybersecurity and intellectual property protection, including for government users: DMA has a variety of implications for cybersecurity and intellectual property (IP). For example, limiting a platform's ability to combine data across different core platform services could prevent targeted companies from accessing cross-platform data to detect and block threats. Users may also fall victim to fraud. As an example, app stores are concerned that developers are directing users to alternative payment methods that lack the protections of the stores' own payment systems or make it difficult to cancel subscriptions. Apple has long been concerned that users who sideload third-party apps could accidentally introduce malware and other problems to their iPhones and violate their privacy. In fact, Apple reports that several European government agencies, including defense, banking, and emergency services, have contacted Apple to prevent government employees from sideloading third-party apps onto government-purchased iPhones. It is said that he took it. In that case, would Europeans sideload apps onto their iPhones? In our survey, only 10% of iPhone users said they would “definitely” sideload other apps, but 58% said they “probably” sideloaded an app or “didn't sideload at least one app.” “Yes,” I answered.
Most Chinese platforms, such as Tencent, Baidu, Alibaba, and Huawei, which are not subject to the DMA, do not provide interlinked services, prioritize their own services, operate closed ecosystems, protect their own data, etc. They should be satisfied that they can now participate in activities that American companies cannot. .
Additionally, DMA provisions that require platforms to provide data to third parties could potentially give U.S. rivals, including China and Russia, access to users' sensitive data and even trade secrets. His CEO at the Munich Security Council, Benedict Franke, recently suggested that these security concerns were not adequately addressed in the creation of the DMA.
How the DMA ultimately shapes Europe's digital markets now rests with the European Commission, which has said it will not hesitate to take action against perceived violations. , the fine could amount to as much as 10% of the target company's sales. The first question the Commission should ideally ask is: Are Europeans better off than they are now?
Kati Suominen is an Adjunct Research Fellow (adjunct) in the Europe Program at the Center for Strategic and International Studies in Washington, DC.
