ECN Digital Markets Act Conference 2024
Monday 24 June, the European Competition Network (ECN) organized a conference on the Digital Markets Act (DMA) at the Sheraton Hotel, Amsterdam (Schiphol). The ECN-DMA conference 2024 was organized by the following ECN competition authorities: Austria, Belgium, Estonia, Germany, Portugal, Spain, Sweden, The Netherlands, and the EU Commission.
The aim of the conference was to highlight the positive effects that the DMA can have for businesses and the European economy, and to empower businesses to use these opportunities. By sharing, explaining and discussing the opportunities that the DMA presents, the conference placed businesses in a better position to use the DMA to their advantage. The primary target audience for the conference was businesses that are existing or potential competitors, access seekers, and business users of the Big Tech companies that have been designated as gatekeepers. The conference was attended by over 300 participants and there were over 100 online spectators.
Speakers included Mozilla, Bol, Ian Brown, Spotify, Cristina Caffarra, DuckDuckGo, GetYourGuide, Element/Matrix, Klarna, Zalando, Fiona Scott Morton and others. Executive Vice-President of the European Commission Margrethe Vestager opened the conference.
This one-day conference featured plenary sessions on Access and Interoperability and on Consumer Choice. Breakout sessions were held on the following topics: Operating systems, Search engines, App Stores, NIICs, Browsers, E-Commerce & online booking platforms, Generative AI and Advertising Services.
The full program of the conference can be seen here. At the end of the conference, Martijn Snoep and Fiona Scott Morton discussed the conference highlights; summary below.
What was learnt?
The business users who participated in this conference deserve the gratitude of the business and regulatory community. Many access-seekers and business users are reluctant to air their views because of the risk of antagonising gatekeepers, with whom they have a business relationship. So the businesses present at the conference were representative of those who were not afraid to speak.
Interesting points made during the plenary and breakout sessions
a) Digital plantation v digital ecosystem: Referring to the digital landscape as a digital ecosystem is a misnomer, it has much more in common with a plantation than with an ecosystem. An ecosystem is an open, self-regulating, moving environment, like in a rainforest. The gatekeepers regulated by the DMA have created a far-more organized, limited and controlled system of agriculture, which is really more like a plantation than a rainforest.
b) The narrative of security excuse, which is so often used by big tech players, is a self-serving story created by the incumbents who have the ability to solve incredibly complicated technical problems. Security solutions are not intractable and do not prevent compliance. Once security is taken care of, consumers obviously like choice.
c) Messaging is different from the other solutions in the DMA because it involves the direct communications of users rather than the relationship between end-users and business users. This means there is a need to link the entrants. The DMA can require the incumbent to interoperate with entrants A and B and C, but there is no need for A and B and C to decide to be interoperable with each other. Some might want to do that and others not. However, the DMA does not control the entrants. This presents a trick conundrum, which needs a solution in order to get one big network to work efficiently, and to cover the world, like email does. Europeans want to communicate not just with each other through messaging, but also want to communicate with non-Europeans.
d) It was very interesting to have public entrepreneurs participating in the conference. The Estonian government has internet voting, which is very successful on the desktop. A different app store is needed for this to work on mobile – which of course is necessary for full participation. Voting cannot work via an app store, which keeps track of what users do. Voting must be secret. The app store can know nothing about your activities in the app. So the Estonian government wants their own app store that can preserve privacy. A one-size-fits-all app store will not serve society when some applications require privacy and in others, the consumer wants the protection of the app store, as an intermediary to keep the provider of the service (such as a flashlight or a weather information provider) at arm’s length. This is a great example of why competition in app stores will stimulate innovation.
e) It is good to know that there is a commercial app store on iOS now: 9 gaming apps at the moment.
f) Many reports about how web apps are not working well on incumbent operating systems. This instance of noncompliance makes a lot of sense because web apps are a huge risk to incumbents’ profits. Not only will the company lose revenue in the app store - because disintermediation would become very easy, just click through to the web and there no need to touch the app store at all – but also a user playing a game or using a service in the cloud is moving computation off the device. This reduces the need for local computing power and lowers the demand for expensive hardware. This is another threat to the incumbent’s business model.
g) Therefore, browsers are critical middleware. If developers can run all their services on the web, they do not need stores and can disintermediate the store easily. Developers will write for browsers, which immediately raises the issue of compatibility / interoperability of browsers. Users and developers will be more Operating-system-agnostic as long as the browsers will run on rival operating systems or hardware. This makes enforcement in browsers critical.
Other observations
The stakes are high to make the DMA work. There will be a need to move to more draconian laws if compliance does not happen. We have the following choices:
a) Keep the status quo with monopoly price, monopoly quality, and monopoly innovation. This choice has already been deemed unacceptable by society but also at a political level.
b) Enforce the DMA vigorously and briskly. This was the focus of the ECN-DMA conference.
c) Change regulation to a command-and-control system of prescriptive regulation where the bureaucrats write the code or give very detailed instructions to the gatekeepers including choosing prices (including data barter). However, digital regulation is different from water regulation. Here we would be asking civil servants to design e-commerce, social media, search, and operating systems, and make individual technical decisions. Every year. There are not many civil servants and even fewer citizens who would want to sign up for that.
d) Adopt giant industrial policy to get European infrastructure so that Europe is not “dependent” on US infrastructure. Tax Europeans to subsidize European firms to build a social network, search engine, ecommerce site, browser, mobile operating system, video sharing platforms, and more. It is important when considering this solution to also consider the incremental value it would deliver, less the huge fixed costs such subsidisation would need to be built and enforced. Plus the cost to the other issues on which taxpayers could spend their public funds, such as green transition, fighting tyranny, anti-terrorism and demographic transition.
In addition, we have to be aware of the threat from digital conglomerates based in other parts of the globe, where human rights, privacy, safety standards and environmental rules are not necessarily the same as in the EU, which can create an unlevel playing field. We should develop a comprehensive strategy to deal with this unfair competition.
What are the lessons for National Competition Authorities and associations of business users?
National competition authorities need to open their doors to these companies, be easily reached, reassure them and be ready to talk to them in their language. Associations of business users should get organized and be ready to communicate, educate, and advocate. They need to pool resources, shield individual small businesses from retaliation, combine knowledge, press the gatekeeper on APIs or other conditions, communicate jointly and propose a solution that works for many business users. They can also jointly hire. For example, a data processing company to develop the tools to accept the gatekeeper’s data flow.
This requires a change of attitude on the part of the national competition authority, which has to see the business user, not as a potential violator of competition law, but as a partner. National competition authorities should reach out, try to understand the business model and the practical problems of the entrepreneur to help them use the DMA to their advantage. The recently published Belgian competition authority brochure (external website) is a good example of this.
One of the themes throughout the day was the information asymmetry between the authorities and the gatekeepers. The authorities need the business users to tell them in great detail what they need for effective entry so that the authorities can impose that on the gatekeepers. The national authorities can add value compared with the Commission for those companies that rather talk to their national authority than go to Brussels. This places an important responsibility on the national authorities to act when they are being approached by business users.
Business users often do not like going to authorities and would rather find a technical solution to their problems, but the law will never work if business users do not engage. It is important that companies see that talking to their authority is a public good that is useful for society and helps the market develop. Those who set company strategy need to have a good grasp of the legislation to understand what their opportunities are.
We need best practices for studying choice architecture. This is something that national authorities and academics can start on already. There is a lot of disparate evidence available, inconsistent reports on compliance, but no solid evidence for third parties to study. Developing guidance for best practices is relatively easy, let’s just get started.
Conclusion
There was a lot of innovation evident at this conference. This innovation needs nurturing and investment. The DMA provides one way to help: it facilitates a change in abilities and innovation, which will increase revenue. Europe needs more innovation, and the DMA can help.
