What Digital Markets Act Compliance Day Means For The Tech Industry

The Digital Markets Act, abbreviated as the DMA, is the European Union’s effort to regulate big tech companies, making sure that they create and maintain a fair and competitive digital market.

Instituted in November 2022 and applied since May 2023, the DMA specifically targets “gatekeepers” – companies providing critical digital services, like social media platforms or search engines, that serve as a bridge between a vast number of businesses and consumers.

By March 2024, tech giants such as Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft were identified under this regulation, making this a huge difference in how digital markets go about operating within the EU.

How are Companies Adapting to DMA Regulations?

TikTok has taken proactive steps to align with the DMA by enhancing user data portability and transparency, according to their recent updates.

They’ve introduced a Data Portability API and refined their ‘Download Your Data’ feature, ensuring users in the European Economic Area (EEA) have greater control over their data. Similarly, Meta, designated as a gatekeeper, is preparing to fulfill DMA obligations by enhancing access to data for business users and facilitating user feedback on DMA-related features.

These actions demonstrate tech companies’ efforts to comply with new EU standards while maintaining their market presence.

What Changes Can Consumers Expect?

Consumers in Europe can anticipate more choices and better protection online due to the DMA. This includes choosing default browsers, search engines, and having more control over personal data.

Companies will need to allow alternatives to their services, aiming to prevent any unfair conditions for businesses and end users.

For instance, Android users will have the liberty to select their preferred search engines, disrupting the default settings provided by tech giants.

What Are the Global Effects Of DMA?

The DMA is setting a precedent globally, with countries like Japan and Britain considering similar regulations. As stated by Bill Echikson, a senior fellow at the Center for European Policy Analysis, the DMA could become the global standard for digital regulation, impacting how tech companies operate worldwide.

The Act is part of Europe’s broader effort to set the tone for tech regulation, focusing on consumer choice, market fairness, and data privacy.

What Criticism Does The Implementation Carry?

Though there is a positive intent, there are concerns regarding the DMA’s implementation and its real-world impact. Critics argue that while the DMA aims to make digital markets fairer, it may inadvertently slow down innovation and burden smaller companies.

Some tech companies have raised issues about the DMA’s broad and vague goals, suggesting they could lead to unintended consequences. However, European authorities remain committed, promising strict enforcement and significant fines for non-compliance.

Expert Comment On The Digital Markets Act

Sebastian Gierlinger, VP of Developer Experience at Storyblok, comments, “The Digital Markets Act comes into force on the 7th March and with it arrives a raft of responsibilities and opportunities for tech companies operating in the EU.

“On one hand the 22 ‘gatekeepers’, of which the vast majority are American, now have to comply with a number of new obligations particularly around data sharing, interoperability and access for end users.

“On the other hand, small to mid-sized European startups could see a much more level playing field. They will be able to create their own app stores, have greater opportunities to promote their products, gain access to valuable data held by tech giants and build products and services that work across all major platforms.

“Taken at face value the DMA seems like a huge win for European startups but questions remain about who will ultimately benefit and what this will mean for consumers. There is a risk that big tech companies that are not classed as gatekeepers actually see the largest advantage, and are given free reign to further squeeze small to mid-sized startups.”

“Big tech companies often have a difficult reputation with the public, but it’s worth noting, for example, that Apple’s App Store is currently free from any malware.

“Indeed, large tech companies are generally good at ensuring their platforms are safe for their users. However, the DMA may result in standards slipping substantially because existing security checks will not be possible for all side-channels.

“Smaller companies will also be able to more easily set up their own platforms – such as rival app stores – which is of course good, but it runs the risk of users not being fully protected because these startups do not have adequate resources.”

“There are also questions on enforceability. On paper, the DMA offers up to a 10% of turnover fine for non-compliance. However, we have seen from the sporadic enforcement of GDPR that actually realising Europe-wide tech standards is easier said than done.”

“US and UK startups could see big benefits from the implementation of DMA. With a more level playing field than their home countries, startups operating in these countries may see the EU as a faster and easier place to scale.

“We may see a change in the traditional dynamic of US startups using the UK as a gateway into Europe. With Brexit causing a diversion in regulations and the DMA now making the EU a more hospitable environment for small to mid sized startups, cities like Berlin and Paris could trump London as a home for growing US tech startups.”

“Similarly, some UK entrepreneurs may consider the DMA as providing a significant enough advantage that they decide to found and grow their business in the EU rather than the UK.

“I do not think we’re going to see a flight of startups from the UK but for some startups, particularly those operating in martech, apps and data, the DMA could be a big draw – at least until the UK passes its own equivalent legislation.”

“We shouldn’t underestimate the DMA’s potential impact on advertising and marketing. The Act tackles companies like Google unfairly promoting their services above rivals. It also ends the practice of preinstalled apps and the bundling of data from services owned by the same company.”

“This will have a big impact on the SEO industry. Significantly, because the Act encourages more competition among platforms we could see an explosion in new services for consumers.

“This does run the risk of a more fragmented customer experience but it also enables better data sharing and insights. Marketers can more easily see the impact of their campaigns and understand the relative value of advertising and engaging customers on different platforms.

“It could also accelerate the adoption of composable martech solutions that are capable of interacting easily with numerous platforms. As the number of ways to reach customers grows, marketers will prioritise marketing solutions that enable them to easily build and manage campaigns on multiple platforms.”