Chillin'Competition

[Chillin’Competition will be publishing a series of posts featuring the views of various experts and stakeholders in relation to the European Commission’s proposal for a Digital Markets Act. We have received several contributions and will also be inviting some experts to ensure a plurality of informed views from a variety of perspectives. For our previous posts on the DMA see here (by Pablo), here (by Alfonso) and here (by Cani Fernández, originally published in JECLAP). Today we bring you some reflections by Tim Lamb, Director of Competition at Facebook]

The proposal for a Digital Markets Act (DMA) signals a new approach to the regulation of digital services in the European Union. In the best case scenario, the DMA could establish targeted obligations for true bottlenecks in the digital economy that will help to preserve and re-distribute value for consumers and business users.  That is a scenario that could be welcomed and for that to materialise the new regulation would need to pay particular attention to core virtual infrastructure, such as app stores, operating systems or productivity software.

The DMA will unquestionably apply to Facebook, Google, Microsoft, Apple, Amazon and could potentially to others such as Booking.com, SAP, Zalando, Deutsche Telekom, Schibsted and Orange in one form or another.  These companies have to accept that and understand the implications for their respective consumer and business offerings and products.  Critically, for companies to be able to understand the potential implications of the DMA, the proposal will need to ensure that it contains understandable and actionable obligations.

As it stands right now, the draft DMA is the crystallization of a growing drumbeat over the past few years pressing for new rules to address perceived concerns expressed in many conferences, regulator reports and academic papers. The drumbeat and the draft DMA itself contain an underlying assumption that the extensive powers already conferred on authorities under existing competition laws are insufficient to address a range of perceived harms.

While there are frequent debates as to whether the European Commission (the Commission) has the right tools to exercise its competition functions, there may be something different this time around.  A central tenet of the current debate is the desire for a lower threshold for regulatory intervention and a material lowering of the evidentiary standards. 

As a result, the draft DMA is advancing a form of quasi-competition regulation which is untethered from traditional competition law concepts such as dominance, detailed case by case assessments, economic analysis and an assessment of efficiencies. That untethering gives rise to three key implications that I wish to explore here.

● First, while competition law is generally concerned with market power and business conduct, the draft DMA has a keen desire to intervene in core product design.  Yet that should call for a sharp focus on the consumer experience of those products which appears lacking in the draft DMA. 

● Second, the prohibitions in the draft DMA have very few meaningful or identifiable limiting principles and risk capturing conduct that is both pro-consumer and pro-competitive.  Such an outcome would be undesirable and careful thought should be given as to how to mitigate such risks.

● Third, innovation is a key driver of long-term economic growth. Yet the draft DMA’s proposals will very likely reduce, not increase, the ability and incentive for firms to develop innovative products for consumers. 

The suggestions contained in the article are designed to strengthen the draft DMA. The full article is available here: