Press release: On the European Union’s Digital Markets Act, “Fair Access”, and Vertical Integration

The European Commission, as part of its DMA (Digital Markets Act) regulatory package, is addressing, amongst many aspects of the internet ecosystem, the broader agenda of third-party access to platforms. Specifically, this concerns so-called “business users” who use the platform to conduct their business. 

Press release: On the European Union’s Digital Markets Act, “Fair Access”, and Vertical Integration

The European Commission, as part of its DMA (Digital Markets Act) regulatory package, is addressing, amongst many aspects of the internet ecosystem, the broader agenda of third-party access to platforms. Specifically, this concerns so-called “business users” who use the platform to conduct their business. 

This Commission agenda aims to create a 'fair and competitive market' across platforms for business users. In pursuit of this objective, it is coming up with various proposals that seek to make platforms more open, transparent and equal for different service providers, including the platform itself. The Commission wants to limit the rules that platforms can set, it wants to limit the 'bundling' and favouritism of platforms' own services, and it wants to limit the use of internal data by the platforms themselves.

In our study On the European Union's Digital Markets Act, "Fair Access", and Vertical Integration, we highlight the theoretical shortcomings and practical examples of the negative impacts of this approach by the European Commission. 

Theoretically, it is a misunderstanding of the role of competition in the economy. Competition is not an end in itself and should not be administratively enforced within each platform so that as many business users as possible can provide their services on 'fair and competitive' terms. The role of competition is to ensure that customers have access to cheap, high quality and innovative services, and this is ensured above all by competition between platforms. And which often results in the commercial practices of the platforms (described above) that the Commission seeks to restrict.

On a practical level, there are many examples from the world of bricks-and-mortar business that legitimately use many of the practices for which the Commission intends to penalise platforms (self-preferencing, 'bundling', so-called vertical integration, use of internal data, etc.). Or there are many examples of software that has evolved in a similar way to today's platforms. Thus, third-party add-on services have gradually become the primary functions of the platform or application itself.

For these reasons, the principles of open and fair competition are not a priori the optimal conditions for operating within each internet platform. On the contrary, the principles of open and fair competition need to be respected between different platforms.

You can read the full study in English HERE.
 

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