The implications of the DMA for external trade and EU firms

The EU benefits immensely from a global trading system based on comparative advantages as explicitly recognised in the EU’s trade policy agenda. The US is one of the EU’s largest trading partners accounting for 18% of EU’s exports outside the single market as well as a substantial amount of activity through the establishment of subsidiaries.

The EU benefits from this trading pattern as it allows the EU to expand sales in a number of industries notably pharmaceuticals, machinery, and automotive, where the ability to scale production on a global level is essential to being in the lead and leveraging the inherent high fixed costs of R&D investments. At the same time, trading patterns give EU firms the ability to use digital tools and platform services developed i.e. by US based companies.

The EU’s trade relations with the outside world and with the US specifically relies on a mutual understanding of the benefits it provides to all parties. Factors such as mutual recognition of standards, equal treatment of comparable situations and competitive neutrality are essential in this regard.

In this context, we find that the current form of the DMA raises two kinds of risks:

• Some of the provisions of the DMA may de facto discriminate against firms based in the US
• EU firms may face reduced productivity and competitiveness as the proposed DMA may impair some of the functionalities of digital platform services that create value for the users

The study is commissioned by Google.