In mid-January 2021, PubAffairs Bruxelles organised an evening of discussion on how to preserve innovation and competition in the EU digital economy with special regard to the recent release of the Digital Markets Act (DMA) proposal with our distinguished speakers Ms Deirdre Clune MEP (EPP/IR), Mr Martijn Snoep, Chairman of the Netherlands Authority for Consumers and Markets (ACM), Professor Nicolas Petit, Competition Law, European University Institute (EUI) and Mr Kayvan Hazemi-Jebelli, Competition Counsel at Computer & Communications Industry Association (CCIA).
The discussion was moderated by Ms Aoife White, journalist at Bloomberg
Aoife White launched the debate by explaining that, in line with the approach of the European institutions of setting new rules to make « Europe fit for the digital age », the Digital Markets Act aims to regulate major online platforms, also defined as « gatekeepers », with special regard to their respective market position in order to ensure « fairness » and « contestability » of EU digital markets.
The moderator asked the panellists to share their opinion on the definition and implications of the « fairness » and « contestability » concepts with regard to the EU digital markets, as well as on what outcomes EU institutions are expecting to achieve with the DMA.
Ms Deirdre Clune MEP began her reply by stating that « contestability » and « fairness » of digital markets should be indicated by the ability of small and medium-sized enterprises (SMEs), as well as of other types of business, to compete and engage in these markets without being disadvantaged or prevented to sell their goods and services by dominant market actors. Despite the fact that seven of the ten largest companies in the world belong to the digital sector, she continued, the size of the company should be less of a factor in defining « gatekeepers », but rather the existence of unfair practices against competitors, such as preventing market access to third companies or towards an unfair use of data. She subsequently mentioned a lack of willingness to share data or to enable interoperability, as well as the preferencing of own products over others as examples of unfair conduct.
The MEP continued by asserting that the DMA is meant to build a European digital ecosystem whereby businesses can contest their respective positions fairly and encourage investments and innovation, while highlighting that the new proposal will not be the silver bullet which will overhaul the digital single market. However, given the fact that the largest global players of the tech sector are prevalently based in the US and China, the MEP recalled that fostering venture and public capital investment in new companies and technologies in order to overcome the gap between Europe and its global competitors has been emphasised several times as a priority by the European Parliament. Indeed, the MEP reiterated that the main objective of the DMA is to limit the power or dominance of some market players and foster the ability to compete in a fair fashion, and that size should not necessarily be considered as a factor of penalisation in itself.
Ms Clune MEP concluded her remarks by calling for a united European approach on the matter of platform regulation and highlighted that, even though some Member States are making their own efforts in this direction, it would be important to avoid a fragmented regulatory framework across the EU that would be harmful to the Union, particularly to smaller countries. She hence stated that a misaligned and individual approach of EU Member States would be in nobody’s best interests, including those of large players.
Mr Martijn Snoep answered the question by remarking that the main aim of the DMA is to create market conditions that work well for people and for businesses, now and in the future. Given this premise, the speaker emphasised that the DMA is not a proposal for a law that only focuses on consumer welfare, but it also aims to address « fairness » and « contestability » of EU digital markets. The assessment of fairness is only possible, he stated, if the specific legal, economic and social context is taken into consideration.
The speaker also pointed out that the current DMA proposal at first sight seems to offer the necessary flexibility to make such specific market assessment and to allow for tailored rules to make markets work well for people and businesses, while taking into account the necessary efficiency and speediness of the intervention. The speaker emphasized the need for the DMA to be flexible, easily adaptable to changing circumstances and the willingness to second-guess previously imposed rules. He subsequently called upon regulators to be more adaptive in their assessment of the rules’ effectiveness and replacement. He furthermore explained that the evaluation of the DMA has to be an ongoing effort orchestrated by the European Commission, supported by national authorities, in deliberation with all concerned stakeholders, including large platforms and their challengers.
He then went into detail about the matter of innovation, which he asked to be taken into consideration. He added that one has to look at the innovation incentives for actual and potential « gatekeepers », but also at the innovation incentives for new entrants and new market creators. Indeed, he explained that the lack of market access may lead to a negative effect on this important feature of digital markets. For this reason, Mr Snoep underscored the importance of evaluating the net effects of the DMA in terms of innovation for both the « gatekeepers » and other businesses.
Finally, Mr Snoep agreed with Ms Clune’s MEP argument which maintains that the DMA should aim to rebalance market power and not necessarily to reduce the size of companies. He also remarked upon the question of the influence some players may exercise when threatening to withdraw their business activities from countries that intend to put forward some sort of regulation which negatively affects their business. He said it is hence important, particularly for smaller countries, to foster support for the DMA across Europe.
Professor Nicolas Petit started his reply by sharing the opinion that large platforms have offered fair conditions for business users and end users as players which have opened the floodgate of the opportunities offered by the digital economy. The speaker continued by stating that the very scope of the Digital Services Act Package, which notably couples the DMA with the Digital Services Act (DSA), is a sign that business and end users’ empowerment has occurred in several shapes and forms.
The speaker subsequently explained the definition of « tipped markets », namely an incontestable market situation in which the distribution of value between end users and business users is unfair. He praised EU lawmakers for tackling this issue not only because they have posed challenges to national competition authorities, but also because they constitute a focal point of the questions emerging from the DMA. However, the speaker expressed doubts as to whether the conduct obligations defined in the Articles 5 [Gatekeeper obligations] and 6 [Gatekeeper obligations susceptible of being further specified] of the DMA are really addressing the sharing of value in tipped markets, rather than the questions emerging from untipped markets.
Professor Petit also went into detail about some underpinning stances of the DMA by highlighting that developing rules to foster a fair interaction between major online platforms, their challengers, as well as business users and end users, tend to point toward the idea of a zero-sum game. The speaker continued by explaining that this setting sometimes occurs but that it does not always represent the reality of digital markets. He also added that the exchange of technological and financial capital between major platforms and other firms happens and that it is often mutually beneficial, while adding that, anyhow, the DMA is rightfully tackling the question of rapacious behaviour of large players.
He then exemplified his argument with the case of merger and competition law applied in the United States where modest antitrust enforcement and a curb on regulation have served as vectors for firm creation and establishment, as well as for indirect innovation.
The speaker followed up on these statements by highlighting the positive effects of a pan-European approach which is embedded in the DMA and he commended the European Commission for its efforts in this regard by agreeing with Ms Clune that a misaligned approach of EU Member States would not serve anyone’s interest.
With regard to the controversies that occurred regarding Google’s operations in China and Australia and as a conclusion, he added that the geopolitical dimension is also an important aspect to take into account when engaging with the question of large players in digital markets.
Mr Kayvan Hazemi–Jebelli began his reply by stating that the concepts of « fairness » and « contestability » are somehow undefined in the digital markets’ regulatory landscape. Indeed, he continued by explaining that, while competition law is usually directed towards consumer welfare, the DMA tries to establish « fairness » and « contestability » as new legal points of reference.
In order to give a sense of how courts may interpret these concepts, he referred to Article 10 [Updating obligations for gatekeepers] of the DMA, which lays out the possibility of imposing new remedies following a market investigation, as long as they address the questions of unfairness and a lack of contestability in the same way as the practices addressed by the obligations laid down in Articles 5 [Obligations for gatekeepers] and 6 [Obligations for gatekeepers susceptible of being further specified]. The speaker elaborated on this question by referencing the latter Articles, which do not only list exclusionary or exploitative behaviour, but also include the raising of competitors’ costs, data protection and consumer protection objectives as relevant criteria. He added that, given the lack of a safe harbour for objective justifications or pro-competitive defences, there might be several cases in which businesses might be considered guilty of conducting certain practices merely while protecting their legitimate interests. Against this backdrop, Mr Jebelli stated that the concepts of « contestability » and « fairness » applied in the DMA are dependent upon the eye of the beholder.
The speaker went on to emphasise that the trend of investments will depend also on the indicators which would define online platforms as « gatekeepers » falling within scope of the DMA. He elaborated on this statement by explaining that it is in the interest of players and investors in the platform economy to reach the highest number of business and monthly active end users possible both in the supply and the demand side. However, as the DMA defines an important gateway by a minimum uptake of 45 million monthly active end users [established or located in the European Union] and more than 10.000 yearly active business users [established in the EU in the last financial year], these thresholds will have an impact on incentives and on where to invest.
Mr Jebelli furthermore emphasised that, when it comes to considering possible market withdrawals, one should not immediately jump into the conclusion that a given company is exerting some kind of monopoly power, as there are several reasons for not being active in a given market. Mr Jebelli concluded his remarks by stating that globalisation provides the opportunity of having open markets and allows for the creation of incentives for conducting business on worldwide marketplaces and, for this reason as well, he called for the DMA to have clear and objective bases with rules that are administrable and fair.
Aoife White continued by reciting the gatekeeper definition proposed by the DMA and asked the panellists whether the criteria listed in the DMA are fit for addressing the questions emerging from « gatekeeping platforms » without harming other market actors. The moderator also asked whether the prohibited practices outlined in the DMA would be effective in creating fairer market conditions.
Professor Nicolas Petit began his reply by explaining that network effects and the gathering of data are used by the DMA to define a « gatekeeping platforms », while highlighting that the criteria of market capitalisation is also often used as a point of reference. The speaker subsequently stated that the criteria of network effects and data have been chosen due to an objective lack of better options, while emphasising that he deems criteria such as number of users and leading market position more appropriate.
The speaker went on to point out that, rather than the definition of « gatekeepers », the concept of « core platform services », notably present in several parts of the bill’s text, is of highest importance and murky at the same time. He exemplified his stance by referring to the case of TikTok, which, according to the DMA’s definition of core platform services, has been categorised as a social network. The authorities in the US, however, have contended that TikTok is not falling under the market definition of a social network in the course of their ongoing case against Facebook. With this example, he hinted at the possible difficulties that might complicate the attempts of categorising platforms that do not fall neatly within the definition of « core platform service ».
On a different note, Professor Petit referred to recital 23 of the DMA, which he said suggests that at the stage where gatekeeper designation takes place, companies cannot bring forward the demonstration of efficiencies as reason for their practices. Based on the above-mentioned recital, the speaker questioned whether platforms could present their current competition with each other for a gatekeeping position as an argument to defend their practices. He elaborated on this question by referencing the example of the currently increasing competition in the cloud service sector. Professor Petit explained that competition in this specific domain is fostered by both means of co-modification, as in the case of Google, Oracle, Microsoft and Amazon, which provide a similar general cloud service product – and differentiation – as the competition between Amazon and Microsoft in providing AutoCloud services demonstrate. Based on these considerations, the speaker raised the question of whether it would be appropriate to state the existence of a « gate » within the gatekeeping identification process, as there is no gatekeeper due to the fact that there is already competition in the market.
He continued by stating that, even though the most simplistic definition of « gatekeeper » has the merit of clarity, it would necessarily imply a static perception of the market with one stable gate. However, he continued, the « gatekeeper » designation process should take into account the possible occurrence of having several « gates » contemporarily.
Professor Petit concluded his remarks by proposing that, in spite of the fact that the notion of efficiency is not central in the DMA, the definition of « gatekeeper » should include the assessment of observed levels of competition by reference to behavioural indicators in order for companies with a high market capitalisation to argue that they are competing with each other as equals for the same « gate ».
Mr Jebelli began his remarks by stating that when one opts for a broad definition of « gatekeeper », a high degree of flexibility regarding the obligations and prohibited practices is needed to prevent severe interferences with business operations. As the example of Zoom shows, the speaker said, even companies which are relatively new on their respective markets would fall within the thresholds proposed in the DMA. In addition, considering the earlier attempts of different national expert reports to find a workable qualitative definition of « gatekeeping platform », they mostly included criteria such as a « strategic bottleneck function », control over others’ market access and a high amount of dependent business and end users, the speaker remarked. He highlighted the need for a higher flexibility on the enforcement of specific obligations when moving towards a set of quantitative criteria that would be applicable over a wide range of core platform services providers.
With regard to the question of prohibitions contained in the DMA, he stressed the self-enforcing character of the list of prohibited practices of the DMA that creates a strict liability regime and reiterated the argument of the lack of objective justification and safe harbour for pro-competitive behaviour.
Additionally, the speaker drew attention to a degree of lack of understanding of digital companies’ business models. Mr Jebelli explained that, as large platforms create a higher competition on the supply side by making suppliers accessible, online platforms offer better prices and bigger choices for customers, lower transaction and search costs, as well as a broader product variety for consumers. However, Mr Jebelli stated, the DMA focuses on protecting business users and treating platforms like public utilities. Within this context, the speaker also pointed out the risk that under such a comparison their consumer serving services are being devalued, ignoring their valuable contribution as aggregators and gateways for consumers.
Moreover, Mr Jebelli described how the « gatekeeping function » of online platforms increases consumer trust by preventing malicious actors from entering the market. He substantiated his stance by mentioning the example of Microsoft’s efforts to reduce malware, which was successful due to the application of the mobile software distribution model. The speaker additionally raised the question of whether integrative efficiencies, such as cameras in mobile phones, photo editing on social media and heart rate sensors in smart-watches, would be available nowadays if the DMA had been implemented a decade ago.
Mr Snoep replied to the question of the moderator by stating that the DMA is supposed to provide an instrument to the European Commission that is speedier and more efficient than ex-post competition law. He subsequently explained that, despite the possible risk of over-enforcement and under-enforcement, clear ex ante rules for the identification of gatekeepers and for certain types of behaviour a reversal of the burden of proof will improve the administrable of the desired intervention.
By using the example of merger control, a legal process whereby, ideally, only mergers which can lead to a dominant position should be reviewed, he remarked how difficult it is to predict scenarios in advance and avoid scrutiny of non-problematic mergers, as well. In this connection, the speaker stated that in merger control, it was necessary to build thresholds that are unrelated to the ultimate goal. Mr Snoep also called again for the simplest approach possible when it comes to defining the criteria to define a « gatekeeper » within the DMA. Referencing the bill’s escape clause, he subsequently added that, in case the Regulation proves to be over-inclusive, it should be possible to revert this status towards a swift juridical process. However, in case of under-inclusion, « gatekeepers » can be designated as such by means of a quasi-New Competition Tool. That way, the speaker said, there is room for flexibility and revision in any possible scenario.
On a different note, the speaker remarked on the importance of taking also the DSA into consideration when it comes to creating fair market conditions, as the whole Digital Services Act package is poised to improve fairness and contestability. Nevertheless, Mr Snoep reiterated that the rapid developments in digital markets require a high degree of flexibility from regulators when adding and removing rules. Mr Snoep concluded by addressing the comparison of platforms to public utilities. He stated that not only (former) public utilities are regulated, but also other economic sectors are regulated when the market outcomes have been identified as unsatisfactory, like for example the banking industry.
Ms Clune MEP started her reply by emphasising the difficulty of finding ex-ante definitions compared to conducting ex-post evaluations, particularly when it comes to competition-related issues. However, she argued that the European Commission’s approach of laying down definitions and guidelines is especially important for creating a degree of clarity, for large platforms and competitors alike.
The MEP continued her remarks by agreeing with the previous speakers on the question of flexibility and emphasised the opportunity to review and to prevent unjustified listings of companies as « gatekeepers ». She also mentioned that the parliamentary work is going to start soon in the European Parliament’s (EP) Committees concerned by referring to the various EP reports on these issues where the need for an ex ante approach has been often emphasised.
She additionally explained that the list of prohibited practices included in the DMA is based on the complaints and feedbacks from companies which have experienced obstacles in accessing markets or data, while underscoring that the criteria enshrined in Articles 5 [Obligations for gatekeepers] and 6 [Obligations for gatekeepers susceptible of being further specified] would require closer evaluation in the course of the legislative process. With special regard to the developments which are difficult to foresee, the MEP concluded, it would be cautious to incorporate flexible measures in the final version of the bill.
Professor Petit reflected on the issue of « under-specification ». Given the fact that the cases identified to set up the list of criteria have not yet been brought before the Court of Justice of the European Union (CJEU), they do not contain enough juridical evidence to serve as basis for further legislation. He also referenced recital 10 of the DMA, which he said it has been defined independently of the actual, likely or presumed effects. In this connection, the speaker questioned the consistency of the non-consequentialist statement in the recital with the claim to experience made in the explanatory memorandum of the DMA.
The speaker went into further detail about Article 7(5) [Compliance with obligations for gatekeepers] of the DMA, stating that each obligation has a specific objective, while the list of obligations does not provide what the purpose of these very obligations is. He also said that the DMA is leaving it up to interpretation when the concepts of « fairness » or « contestability » come into play. Professor Petit consequently remarked that, while it is common for a legal text at this stage of the legislative process to be relatively abstract, issues may arise from the fact that substantial parts of the DMA proposal are defined in relation to the objectives of the obligations, which, he reiterated, are not clearly specified.
Professor Petit went on to analyse Article 5 [Gatekeeper obligations] of the DMA, which he described as being either about « fairness » or enshrining limited contestability in the core platform service, while Article 6 [Gatekeeper obligations susceptible of being further specified] seeks to prevent platforms from entering adjacent markets. He subsequently criticised the approach taken in Article 6 by arguing that market leading companies such as Google, Apple and Amazon provide ecosystems for European innovators to grow and he mentioned the example of the increasing cooperation between digital companies and the automotive sector which has fostered several innovations.
On a different note, he explained that every new stage of technological development that was reached in history was accompanied by regulations, new rights and entitlements. Against this backdrop, he stated that the DMA is a regulatory adaptation to technological advances and pointed out that the digital sector is relatively unregulated compared to other sectors of the economy. He further reflected on the complex exercise of finding the right balance in regulating digital markets without impeding investment and innovation and concluded by warning against imposing excessive level of obligations, as one might have seen with utilities in the past.
Aoifa White asked the panellists whether the liability of platforms for infringements, as proposed by the DMA, is beneficial to the digital economy and what role the European Commission and the CJEU will have in setting obligations.
With regard to the question of the moderator, Mr Jebelli explained that the ability of the European Commission to extend the list of obligations based on market investigation is a digital economy version of the New Competition Tool. However, he highlighted that the structure of this mechanism is neglecting standard competition norms in favour of the « fairness » argument. This fairness balancing, in his opinion, favours the supply side of the digital markets over the benefits for consumers and incentives for innovation. Nevertheless, the speaker expressed support for strong penalties for infringements and praised the inclusion of potential structural and behavioural remedies, as it is essential for regulators to have the means to address malfunctions in the market.
The speaker subsequently expressed his doubts over the impact of future rulings of the CJEU on the development of the DMA, as the European Commission would insist on the need of the DMA, regardless of whether the CJEU’s rulings are in agreement with the Commission’s perspective on a set of cases or not. In addition, Mr Jebelli highlighted the importance for companies to have the opportunity to present their evidence and arguments, while pessimistic about the likelihood of effective self-regulatory measures given the numerous currently ongoing investigations against some players.
With respect to the question of the possible set up of a regulating authority for the implementation of the DMA, the speaker stated to be in favour of a harmonised approach by the European Commission across the single market in order to ensure the rollout of a product over the entirety of Europe without risking national legal obstacles. He subsequently expressed his concern that the DMA proposal does not impose enough measures to enable this type of harmonisation, as the competitive obligations that national authorities are able to impose autonomously could be inconsistent with the DMA obligations.
He was also unsure whether Articles 1(5) [Limitations on contradictory acts of Member States] and 1(7) [Limitations on contradictory acts of national authorities] go far enough, as he said they address the objectives of the relatively undefined notions of « contestability » and « fairness« . In conclusion, Mr Jebelli brought forward the idea of establishing a tool that, similar to the mechanism used for cases of merger regulation, would be able to give the possibility of referring a case for evaluation to the European Commission.
Ms Clune MEP replied by stating that companies need clarity with regard to market rules but warned against an overregulation of the digital domain, a process that, in her opinion, may harm innovation, businesses and consumers alike. Drawing conclusions from the twenty years of the adoption of the e-commerce Directive, the MEP emphasised that legislation in the digital sector is always catching up with new developments.
On the matter of the expected impact of the rulings of the CJEU and the General Court, the MEP asserted that the upcoming decisions of the Court will influence the discussions between the European Parliament and the Council, especially given the early stage of the legislative process. She reiterated the opinion that caution and balance are needed, while adding that having the European Commission as a principal point of reference for the implementation of the DMA would be preferable in terms of EU-wide homogeneity.
She concluded by emphasising that Europeans feel the necessity for a regulation of the digital markets by democratically elected institutions, although, she added, one should also consider the increased willingness of companies in the sector to self-regulate as a sign of cooperation between competent authorities and the industry.
Professor Petit started by expressing relief over the reasonable set of remedies included in the DMA that do not favour break-ups of companies or MNA bans. In this connection, he stated that the DMA seems to envisage reasonable remedies to possible market imbalances.
However, the « quasi per se prohibitions » outlined in the DMA, the speaker remarked, would displace the discussion towards the question of the extent to which the tailored approach outlined on page 6 of the explanatory memorandum to the DMA is proportionate. For this reason, he foresaw a likely extensive discussion between competent authorities and gatekeepers regarding the question of proportionality.
Against this background, the speaker pointed at the matter of how the rulings of the CJEU will affect the DMA discussion and stated that, despite the fact that the EU has the faculty to legislate the CJEU rulings out, the questions stemming from the judicial process are expected to enhance the level of knowledge on digital markets. In this context, he emphasised that the relevant question will be what EU lawmakers will make with the knowledge generated through the judicial process that is occurring and will take place before European courts.
On a different note, Professor Petit opined on the question of the effectiveness of self-regulation and disclosure from large companies by stating that, despite these kinds of initiatives being able to serve the purpose, they would not be able to make EU-level regulatory measures redundant. The speaker went on to explain that the list of remedies, procedures and fines is to a certain extend almost a copy of the elements of Regulation 1/2003 on the implementation of the rules on competition and illustrated the possible spillover effect of the DMA proposal.
Professor Petit concluded by agreeing with the other speakers that it would make sense to leave the power of enforcement of the DMA within the competences of the European Commission and EU national authorities.
Mr Snoep replied to the question of the moderator by underlining that the proposed liability regime will help enforce the DMA in practice and he drew attention to the need for public authorities to be highly transparent when it comes to the objectives of a given action.
According to the speaker, the European Commission is expected to formulate a clear theory of harm, including an explanation of how the restriction aims to mitigate or prevent harm, followed by an ex-post analysis to reveal whether those measures have been correctly applied. As a final step, a full judicial review of these measures would be necessary, Mr Snoep highlighted, and he stated that the mentioned steps, combined with the notion of « quasi-strict liability », should work well but it is necessary to find the right balance.
Mr Snoep went on to explain that the advantage of the instrument of ex-ante regulation is the increased room for reaching a compromise/commitment with companies which are willing to cooperate and emphasised that a positive aspect of the DMA should result in more room for mutually negotiated outcomes. He furthermore called on companies to show an attitude of cooperation but also asked for caution in terms of regulatory capture.
Regarding the question of which authority should be in charge of enforcing the rules set by the DMA, the speaker expressed favour to the European Commission as the main point of reference, along with national competition authorities contributing with their expertise and insights in national markets. He concluded by arguing that a coherent single market strategy depends on a pan-European approach, particularly in order to foster innovation.
The moderator asked the panellists about their opinion on which outcome the DMA should deliver within a timeframe of five to ten years and how it is expected to influence the relations with the new US administration.
Professor Petit named the results he would not want to see emerge from the DMA by referencing Jean-Jacques Servan-Schreiber’s book « The American Challenge » released in 1967. The speaker explained that Servant-Schreiber remarked on Europe’s inability to successfully create and establish firms to the same extent of the US. Professor Petit subsequently applied Servant-Schreiber’s thesis to the current context and called on European companies to develop relevant capabilities that enable them to expand into new markets, on the one hand, and to leave unprofitable markets, on the other hand. Moreover, the speaker remarked that it would be crucial to create sufficient incentives for European entrepreneurship and he added that an unsuccessful DMA would leave Europe’s markets occupied by non-European companies, especially those from US and China.
Moving on from this consideration, Professor Petit expressed regret over the missing formulation of a European approach on competitiveness of the European economy within the DMA, which he deemed crucial to the prevention of misinterpretations from Europe’s counterparts in the US as a protectionist exercise in disguise. In addition, he highlighted that raising this question for the EU platform economy is not a goal in itself, but it should aim at achieving the largest spillover effect possible in EU educational and innovation processes. He also added that increased competition should not be perceived by non-EU actors as a means of protectionism, but as a way to foster growth and opportunities in Europe. Professor Petit went on to provide insights into the general US perception of EU competition regulation, which considers « fairness » and « contestability » as incompatible with each other and reiterated his call for a clearer classification of the objectives of the DMA.
Furthermore, he explained that the removal of flexibility towards monetisation and business model experimentation, as intended by Articles 5 and 6 of the DMA, might result in an increase in priced subscription services to compensate for advertising, a consequence which he considered not to be beneficial for consumers/users. He concluded his remarks by warning European institutions against losing sight of the interests of the consumers when it comes to the regulation of advertising services.
Ms Clune MEP started her reply by pointing out that Europe needs to increase innovation in order to be able to compete with China and the US, an effort that she described as dependent on Europe’s ability to build its own platform ecosystem and a strong digital agenda. Additionally, she raised the issue of the lack of public spending in the platform economy, a problem addressed by the Recovery Plan for Europe as well, and called for more private investment. The MEP however also remarked that this process poses several challenges to EU institutions, given the dire consequences of the pandemic.
Furthermore, the MEP warned against the perception of the DMA as directed against US companies, rather than as a preventive tool against the market dominance of certain actors. Against this backdrop, she called for the development of a joint transatlantic approach to deal with major tech companies. She concluded by stating that a joint transatlantic approach is achievable given the first indications coming from the new administration in Washington.
With regard to the question of how the European Parliament is expected to position itself in possible trilogue negotiations with the Council, the MEP explained that there is a broad understanding in the Parliament that there is a need for regulation, while the positions of the Member States are still to be formulated in public.
Mr Jebelli addressed the question of the moderator by stating that, in consideration of the perspective of an investor in the platform economy, the outlook of risking regulation once the given platform has reached the threshold of 10% of the European population as potential users, is not creating incentives to invest. The speaker continued by drawing attention to possible effects of the interoperability requirements of the DMA which might result in a shift of resources, away from consumers, and towards the facilitation of customer services for larger business users, while expressing doubts that minor businesses would experience some sort of benefit.
In terms of the DMA’s potential impact on US actions, he additionally stated that common international standards are needed, as they reduce trade barriers, enable access to new markets and foster cross-border investments.
Regarding the question of which parts of the DMA proposal might complicate possible negotiations between the Parliament and the Council, the speaker of the CCIA listed the manner in which the criteria for a designation of a platform as « gatekeeper » were chosen, how the core platform services were chosen, what was the logic behind carving out certain elements of the core platform services, and the logic behind putting some in, as in the example of cloud services.
Despite the fact that the developments on digital markets can take on a rapid pace, Mr Snoep recalled bearing in mind that current « gatekeepers » took more than five years to reach their current positions in the market. So, we should not measure the DMA’s success too early. The speaker also shared the idea that as a side effect the DMA could improve chances for current or new European companies to innovate and grow. Nonetheless, he added that the aim of the DMA should not be to limit the possibilities of non-European companies in favour of European market actors.
On a different note, Mr Snoep stated that economies of scale and low variable costs that can be achieved in many parts of the digital economy are likely to accelerate the process of « creative destruction », a constant evolution of value generation that will eventually lead to new « gatekeepers ». These new « gatekeepers », he continued, should fall under a similar type of regulation as the DMA with a clear sunset clause that ensures follow-up and continued monitoring in order to foster the re-evaluation of the regulatory measures already in place.
The speaker subsequently stated that the EU should aim for its own regulations, regardless of what other countries, such as the US, are opting for, while adding that, even though it would be preferable to reach a convergence with the US on matters of the digital economy, the EU should set its own rules on how companies in digital markets should operate.
Concerning the question of the future role of national competition authorities, Mr Snoep described the distribution of enforcement competencies according to either the DMA, national equivalent laws and Article 102 TFEU and its national equivalents, as details that need to be addressed during the legislative process.
Finalising his remarks, the speaker mentioned two aspects to be considered in this context, namely the formulation of a harmonised European approach, on the one hand, and room for Article 102 TFEU enforcement by the Commission and national competition authorities, on the other hand.
The remaining part of the debate and the Q&A session covered the following issues: the future role of national competition authorities, options of self-regulation and disclosure, the question of the regulating authority, the expected trilogue on the DMA, the future role of national competition authorities.
Want to know more about the issues discussed in this debate? Then take a look at the selected sources provided below!
CCIA’s feedback on the European Commission’s roadmap on the Digital Services Act aiming at deepening the internal market and clarifying responsibilities for digital services, Computer & Communications Industry Association