Understanding the Digital Markets Act

• Author: Friso Bostoen
• DOI: http://doi.org/10.1177/0003603X231162998
• Published date: 01 June 2023
• Date: 01 June 2023

https://doi.org/10.1177/0003603X231162998

The Antitrust Bulletin

2023, Vol. 68(2) 263 –306

© The Author(s) 2023

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DOI: 10.1177/0003603X231162998

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Article

Understanding the Digital Markets Act

Friso Bostoen*

Abstract

In September 2022, the European Union (EU) legislature adopted the Digital Markets Act (DMA)—a

landmark piece of regulation with the potential to transform the digital economy in Europe and beyond.

Even after adoption, however, questions remain about its stated goals, underlying assumptions, scope,

obligations, and eventual effectiveness. This article examines these questions using EU competition law

not as a touchstone but as a reference point. First, the DMA’s goals of “fairness” and “contestability”

can be more accurately restated as the protection of intra-platform and the promotion of inter-

platform competition. Second, the DMA is based on the idea that the enforcement of the abuse

of dominance provision, Article 102 Treaty on the Functioning of the European Union (TFEU), is

ineffective both procedurally (due to lengthy investigations and remedial issues) and substantively

(due to the difficulty of establishing dominance and abuse)—two assumptions that must be tested by

examining competition law’s track record. Third, the scope of the DMA is built around the concept

of “gatekeepers,” which are in turn defined based on turnover, market capitalization, and active users.

Is this an application of the resurgent “big is bad” ideology or a proxy for market power? Fourth, the

DMA imposes a list of dos and don’ts on gatekeepers, many of which are inspired by past or ongoing

antitrust investigations. Does this experience justify the far-reaching obligations and if so, are they

sufficiently flexible to allow for procompetitive gatekeeper conduct? Finally, the DMA is based on

the idea that large online platforms have not continued to deliver the desired innovation outcomes

and have reaped more than their fair share of the rewards from the innovation they brought. This

assumption is tested by a historical look at Apple’s App Store—the most important innovation

platform to arise in the digital economy.

Keywords

platform regulation, Digital Markets Act, fairness, contestability, gatekeepers, App Store

I. Introduction: The DMA’s Origins and Goals

In September 2022, the European Parliament and the Council adopted the Regulation on contestable

and fair markets in the digital sector, better known as the Digital Markets Act (DMA).1 The legislative

process was speedy and, unusually, the final text is stricter than the one proposed by the European

*Max Weber Fellow, European University Institute, Fiesole, Italy; Affiliated Senior Researcher, KU Leuven, Leuven, Belgium

Corresponding Author:

Friso Bostoen, Max Weber Fellow, European University Institute, Via dei Roccettini 9, Fiesole, 50014, Italy.

Email: friso.bostoen@eui.eu

1162998ABXXXX10.1177/0003603X231162998The Antitrust BulletinBostoen

research-article2023

1. Regulation (EU) 2022/1925 of the European Parliament and of the Council on contestable and fair markets in the digital

sector [2022] OJ L265/1 (hereafter: DMA).

264 The Antitrust Bulletin 68(2)

Commission (EC) in December 2020.2 With the legislative process in the rearview mirror, it is time to

start looking forward to its implementation.3 To properly enforce the DMA and evaluate its enforce-

ment, it is necessary to understand this unique piece of legislation—and the DMA itself is not always

as helpful in that regard, starting with its underdefined goals of “fairness” and “contestability.”

To begin understanding the DMA, it is useful to look at the bigger legislative picture. Across Europe,

from Germany4 to the United Kingdom,5 policymakers are complementing competition law with spe-

cific acts targeting abusive platform conduct. Bills have also been introduced in the United States,6

although their adoption is a more distant prospect. The idea underlying these initiatives is that competi-

tion law is too narrow, either by design or through judicial interpretation (in particular in the United

States), which has led to under-enforcement, especially in the digital economy. Accordingly, the new

laws are supposed to recalibrate enforcement. While they contain similar substantive provisions,7 the

DMA is set to be the most consequential, which is why it deserves our full attention.

In addition to sketching this global push for platform regulation, it is important to situate the DMA

within the wider European Union (EU) effort to regulate various aspects of digital markets, focusing on

the instruments that it interacts with.8 First, the DMA is part of a package that also includes the Digital

Services Act (DSA), which focuses on the accountability of online platforms regarding illegal and

harmful content.9 Second, the DMA goes a step further than the Platform-to-Business (P2B) Regulation

of 2019, which focused on introducing transparency in the relation between platforms and their busi-

ness users.10 Third, the DMA shares a concern for data protection with the General Data Protection

Regulation (GDPR), and even strengthens it on certain fronts.11 Fourth, the DMA’s contestability goal

is reminiscent of the pluralism pursued by the Audiovisual Media Services Directive.12 Finally, though

2. EC, Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital

sector COM(2020)842 final. DMA, art. 7 (on interoperability of number-independent interpersonal communication ser-

vices), for example, was not part of the EC proposal.

3. At the time of writing, the EC is looking for feedback on an implementing regulation, see Commission Implementing

Regulation (EU) . . ./. . . of XXX on detailed arrangements for the conduct of certain proceedings by the Commission

pursuant to Regulation (EU) 2022/1925 of the European Parliament and of the Council.

4. Gesetz zur Änderung des Gesetzes gegen Wettbewerbsbeschränkungen für ein fokussiertes, proaktives und digitales

Wettbewerbsrecht 4.0 (GWB-Digitalisierungsgesetz), Jan. 18, 2021. For an English translation highlighting the new

provisions, see “German Competition Act 2021—Unofficial Translation” (D’Kart), https://www.d-kart.de/wp-content/

uploads/2021/01/GWB-2021-01-14-engl.pdf.

5. See “A new pro-competition regime for digital markets” (July 2021) CP 489 for the proposal and Tom Smith, Full Steam

Ahead for the UK Digital Markets Unit, The Platform Law Blog (Nov. 17, 2022), https://theplatformlaw.blog/2022/11/17/

full-steam-ahead-for-the-uk-digital-markets-unit/ on the legislative progress.

6. See in particular H.R.3816—American Choice and Innovation Online Act, 117th Congress (2021–2022) and S.2710—

Open App Markets Act, 117th Congress (2021–2022).

7. For a comparison of both the substantive provisions and the operation of the different regimes, see Elias Deutscher, Reshaping

Digital Competition: The New Platform Regulations and the Future of Modern Antitrust, 67 Antitrust Bull. 302 (2022).

8. DMA, recital 12 states it applies “without prejudice” to those instruments. Further on their interaction, see Konstantina

Bania, Fitting the Digital Markets Act in the Existing Legal Framework: The Myth of the “Without Prejudice” Clause, Eur.

Compet. J. (Dec. 15, 2022).

9. At the time of writing, political agreement on the DSA had been reached, see EC, Digital Services Act: Commission

Welcomes Political Agreement on Rules Ensuring a Safe and Accountable Online Environment (press release, Apr. 23,

2022), IP/22/2545.

10. Regulation (EU) 2019/1150 of the European Parliament and of the Council on promoting fairness and transparency for

business users of online intermediation services [2019] OJ L186/57 (hereafter: P2B Regulation).

11. Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard

to the processing of personal data and on the free movement of such data [2016] OJ L119/1 (hereafter: GDPR). Notably, it

strengthens the right to data portability (GDPR, art. 20), see further infra, Section III.

12. Directive 2010/13/EU of the European Parliament and of the Council on the coordination of certain provisions laid down

by law, regulation or administrative action in Member States concerning the provision of audiovisual media services

[2010] OJ L95/1, as amended by Directive (EU) 2018/1808 of the European Parliament and of the Council amending the

Audiovisual Media Services Directive in view of changing market realities [2018] OJ L303/69.

Bostoen 265

not adopted with the digital economy in mind, the Unfair Commercial Practices Directive has a similar

focus on fairness and also includes a “blacklist” of banned practices.13

Notwithstanding this regulatory context, the DMA’s lineage must ultimately be traced back to com-

petition law. The DMA is both inspired by competition law and designed to remedy the limits inherent

in the enforcement of the abuse of dominance prohibition of Article 102 of the Treaty on the Functioning

of the European Union (TFEU).14 Such enforcement proceeds relatively slowly, inter alia due to the

need for fact-intensive assessments, which can be particularly complex in digital markets. Many of the

design choices in the DMA can be explained by this “need for speed” or procedural efficiency. This

comes to the fore most clearly in its scope. Where the scope of Article 102 TFEU is determined by the

concept of market power (or dominance), which requires a close examination of the market in question,

the DMA relies on the concept of “gatekeeper,” for which it uses simple(r) thresholds. In addition, the

DMA works with a relatively precise list of dos and don’ts that do away with competition law’s effects

analysis. The DMA also largely discards the possibility to justify prima facie abusive conduct. When it

comes to remedies, there are tweaks but no major departures from Article 102 TFEU.

This article is not a comprehensive guide to the DMA, and for specific questions—for example,

regarding its legal basis,15 institutional setup,16 and ne bis in idem17—other sources should be con-

sulted. Rather, I seek to understand and evaluate the DMA on the eve of its implementation. Section IA

starts by asking how to evaluate the DMA, concluding that competition law should not serve as a

touchstone but as a reference point, while sectoral regulation, in particular of telecommunications, is

also a meaningful comparator. Given that competition law’s supposedly poor track record in digital

markets was the impetus for the DMA, Section IB studies that track record, observing that both speed

and remedial action have been pain points, even though the substantive provisions appeared flexible

enough to be applied effectively to online platforms. Next, our attention turns to the DMA’s text.

Section II examines the gatekeeper concept that determines its scope: does it signify a resurgence of the

“big is bad” ideology or does it serve as a proxy for market power (and if so, how accurately)? Section

III goes through the DMA’s list of obligations, checking the extent to which they are supported by past

competition law enforcement. Section IV looks at justifications under the DMA, or rather the lack of

them, finding that the impossibility to justify requires trusting the EC’s discretion—something that,

understandably, not everyone is comfortable with. Section V zooms in on the remedy problem, which—

in contrast to the problem of speed—the DMA does not resolve and at best mitigates. Finally, Section

VI presents a case study of Apple’s App Store—the most important innovation platform to arise in the

digital economy. The DMA is based on the idea that large online platforms have not continued to

deliver the desired innovation outcomes and that the spoils from digital innovation have not been dis-

tributed fairly. A look at the evolution of the App Store allows us to test that assumption.

A. How to Evaluate the DMA?

Given the evaluative ambition of this article, the first question is how to evaluate the DMA. Put differ-

ently, which mental model should one adopt when scrutinizing the DMA? One could examine the DMA

on its own terms, so with its stated goals of fairness and contestability in mind. Alternatively, one could

13. Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial

practices in the internal market [2005] OJ L149/22.

14. Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C326/47 (hereafter: TFEU),

art. 102.

15. Alfonso Lamadrid de Pablo & Nieves Bayón Fernández, Why the Proposed DMA Might Be Illegal under Article 114 TFEU,

and How to Fix It, 12 J. Eur. Compet. Law. Pract. 576 (2021).

16. Giorgio Monti, The Digital Markets Act—Institutional Design and Suggestions for Improvement, TILEC Discussion Paper

2021-004 (2021).

17. Giuseppe Colangelo & Marco Cappai, A Unified Test for the European Ne Bis in Idem Principle: The Case Study of Digital

Markets Regulation, (2021), https://ssrn.com/abstract=3951088.