Igor Bubelov About Blog Photos

Digital Markets Act

January 28, 2021

Most of the tech innovations come from the United States. No doubt, it offers unique environment for ambitious people to build influential tech companies. Nevertheless, I’m more interested in consequences of having a market dominated by a few monopolies and in the reasons why we don’t see more competition.

It sure seems like a market failure, although it’s important not to be too paternalistic. We shouldn’t assume that consumers are dumb when they make seemingly irrational decisions. I think markets may fail when people don’t understand what kind of deals they’re getting into. Software industry is the worst in this sense. Who reads terms and conditions? Among people who do, how many of them have a clear understanding of what’s going on?

Software companies enjoy locking people in their ecosystems. You have much more leverage over locked-in customers and there are a lot of nasty things you can do to extract profit just because once your customers are glued to your products, it’s almost impossible to break free. If you think deeply about the biggest tech companies, it won’t take you a long time to figure out that all of them are using the same playbook.

Digital Markets Act, or DMA, does a good job at identifying many of those dirty tricks that help monopolies to suppress the completion. Here is a couple of examples:

Article 6(f) — Do make platforms interoperable with other service providers. Gatekeepers would have to make their platforms open to some key third-party service providers, like payment providers, digital identity providers, or ad-tech sellers, on the same terms as their own services.

Article 6(h) — Do make data portable and continuously accessible in real time. Gatekeepers would have to give all users the ability to download their data and take it to a rival. They must also make both end and business user data continuously accessible in real time to their competitors.

My prediction is: if DMA passes in its current form, it will boost the competition in the tech space, and many other countries will follow EU lead.