EU Digital Markets Act Threatens Consumer Access to Online Services, Products

A new Competitive Enterprise Institute report examines a European Union proposal to impose restrictions on technology companies, like stopping companies from preferencing house-brand products and services with lowest price deals for consumers.

“The Digital Markets Act proposed by the European Commission would impose restrictions on technology companies like Internet sellers, social networks, video sharing sites that would leave consumers with fewer and less affordable products and services,” said Henrique Schneider, author of the report and deputy CEO of the Swiss Federation of Small and Medium Enterprises.

“The restrictions may be aimed at improving competition online but in reality would impose daunting regulatory costs and liabilities that would deter especially small companies from devising innovative new services,” Schneider explained.

The report also explains why regulations defining companies as Internet “gatekeepers” or part of a “digital sector” of the economy is a poor match for how the real-world marketplace operates. The practices the DMA seeks to regulate are hardly specific to the online realm and are often deployed by both offline businesses models and firms using multiple marketing channels. Many industries, not just online platforms, are increasingly being transformed by digital technologies. Brick-and-mortar businesses like supermarkets also try to attract customers with tailored advertisements, and they too collect and sell customer data – a practice targeted by the proposed law. 

“As a sweeping overhaul of European competition policy, the DMA could threaten operations of U.S. firms in Europe, discriminate in favor of European companies, and help global rivals—including subsidized Chinese firms—achieve undesirable non-economic goals, such as boosting their respective governments’ geostrategic position,” warned Schneider. “These are all undesirable outcomes.”

• View the report, The European Union’s Digital Markets Act Seeks to Regulate Competition with Little Regard to Impact on Consumers by Henrique Schneider