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Lawmakers and tech firms are clashing over the parameters of the Digital Markets Act and what strict new rules will be imposed.
As the EU hammers out the details of its Digital Markets Act, questions abound on how broad or targeted its scope should be.
The Digital Markets Act seeks to impose stricter rules around competition in Europe. The rules have Big Tech squarely in their sights, especially when it comes to mergers and acquisitions.
France, Germany and the Netherlands are pushing for stricter controls around mergers to ensure that deals both big and small face the necessary scrutiny.
“We have to strengthen and speed up merger control in particular vis-a-vis certain gatekeeper platforms,” the three countries said in a joint statement. They want to tackle companies “systematically buying up nascent companies in order to stifle competition”.
Governments and competition watchdogs have become increasingly critical of tech acquisitions after years of deals that have ultimately led to much consolidation in tech and social media, such as Facebook’s acquisitions of Instagram and WhatsApp.
In recent years, the EU has probed several big acquisitions, such as Google’s purchase of Fitbit. It investigates whether the consolidations will damage competition and thwart smaller players.
However, French, German and Dutch officials believe that it is not quite enough to probe the bumper deals worth billions of dollars. There are many smaller deals that attract relatively less attention or scrutiny that could eventually cause further market concentration.
Watchdogs will still be feeling the burn from their inaction over Facebook’s purchase of Instagram. At $1bn, the deal wasn’t as big as others that followed it. But with Instagram becoming such a massive force under the Facebook umbrella, a question always lingers over whether the deal should ever have gone ahead.
These are the issues that the Digital Markets Act seeks to address, but not everyone is on the same page.
Gatekeepers
Central to the debate is the definition of so-called ‘gatekeepers’. This refers to the large companies that wield disproportionate amounts of power in their markets.
The criteria of a gatekeeper has not been finalised but it’s generally believed that Facebook, Apple, Google and Amazon will be in this bracket. The question remains just how strict the rules will be for these companies.
Last week DigitalEurope, a lobby group representing several major tech companies including Google and Facebook, published its position paper on the Digital Markets Act.
One of its core issues is the definition of a gatekeeper. The organisation said that, as it stands, there is “too large discretion” granted to the European Commission in deciding what a gatekeeper is.
“Under any circumstances, the provisions of the DMA need to be as targeted and limited as possible and should only apply to companies whose dominance in a specific market has been established,” it said.
It warned that the Digital Markets Act could bleed into other policies that the EU is currently crafting. The law is being devised during the same time as the Digital Services Act, which will regulate matters such as content moderation.
DigitalEurope has recommended a two-year implementation period for the Digital Markets Act in order to tweak and changes rules when needed after they are introduced.
