The Digital Markets Act and the role of economics

The final version of the Digital Markets Act has now been approved. It represents a significant overhaul of the European Union’s approach to digital markets and is the first time that ex-ante regulatory obligations are imposed on digital markets.

A key difference which sets the DMA apart from competition law and other regulatory settings is the decision to remove economic considerations from its implementation. Instead, the DMA sets out a pre-defined list of services which are ‘core platform services’, a list of criteria to identify ‘gatekeepers’ unrelated to economic dominance and a list of obligations and prohibitions that these gatekeepers must adhere to. In this article, we discuss the pros and cons of this approach from an economic perspective.

As we discuss, this decision may end up hampering the DMA’s ability to achieve its objectives: on one hand, it may prohibit behaviour that benefits consumers or does not harm them; on the other hand, by setting too narrow a list of prohibited conducts, it may fail to capture behaviour which could have the same intended effects as the prohibited conducts. We finally explain that the lack of proper effects and efficiency considerations may result in imperfect enforcement.