Ursula von der Leyen is licensed under Creative Commons.
Last week the consultation period ended for the European Commission’s review of the 2022 Digital Markets Act (DMA). Testimony from businesses, consumer groups, and independent experts highlighted one clear consensus: the DMA has failed in its mission to benefit consumers and spur innovation. Instead, it has weakened privacy standards, delayed the rollout of new innovations, and degraded the services from existing providers.
Under the DMA, the European Commission is empowered to designate “systemically relevant” technology companies as “gate-keepers.” Unfortunately, what constitutes “systemically relevant” remains vague, enabling inconsistent application and resulting in American companies being disproportionately designated. Once designated, companies face heightened scrutiny from EU tech regulators, often subject to lengthy investigations and exorbitant fines.
For many companies, compliance has proven a difficult goal to reach. Disconnects between regulatory authorities in Europe and private-sector experts have led to billion-euro lawsuits, disproportionately targeting American tech companies. In other cases, American tech firms have been forced to reduce functionality and degrade the consumer experience to meet compliance requirements.
Article 6 (7) of the DMA, which requires gate-keepers to meet interoperability requirements, has notably undermined consumer privacy and security. It has been used to force companies to relinquish valuable Intellectual Property to direct competitors. These Interoperability requirements have the immediate effect of undermining the value of U.S. tech companies’ Intellectual property, reducing incentive for R&D,
For American companies that maintain strict privacy and security standards as part of their business models, interoperability requirements raise serious concerns, often requiring mass decryption of personal information.
These concerns have already motivated companies to delay rollouts of new technologies to Europe and in some cases remove offerings altogether. Citing privacy concerns, Apple services such as Apple AI, Live translation, and Screen Mirroring have been delayed or disabled in Europe. Additionally, new requirements for companies to decrypt and share operating system notifications, potentially including medical and financial information, and WIFI history — which could be used to track consumers.
As we approach the third anniversary of the DMA’s implementation this November, it has become increasingly clear that the DMA has failed at its stated objectives. It has unfairly hindered American tech companies, undermined the value of their IP, and degraded the consumer experience while raising new privacy and security concerns. These consequences necessitate a reconsideration of the DMA and a serious discussion on working towards a fairer legislation that protects consumers, businesses, and innovators.
