The European Commission (EC) recently announced enforcement actions targeting some of America’s most successful and innovative companies, which have been singled out by the EU’s new digital regime, the Digital Markets Act (DMA). Alarmingly, the new orders issued by the EC put at risk consumers and small businesses, and threaten to disadvantage American companies to the benefit of foreign competitors.
The EC’s enforcement actions require American companies to make significant changes to the way they provide their products. While it might make sense in theory, in practice this move threatens to break widely used products and services that people rely on every day. For example, the EC’s order targeting Google Search will make it harder for consumers to find the information they’re looking for. Already, it’s been reported that the DMA’s regulations have degraded online products in the EU.
As an example, regulations that prevent Google from showing travel results that link directly to airline sites mean European consumers typically end up with a more expensive ticket, because airlines now have to pay commissions to intermediary websites. These same changes have made it harder for small- and medium-sized European companies – which have lost up to 30% of their typical web traffic – to connect with new customers. The EC’s latest enforcement actions will only exacerbate these issues.
Additionally, the EC’s orders also pose significant risks to consumers’ online security and privacy. The new enforcement actions include new requirements for app stores to share users’ sensitive data with third-party apps. This mandate threatens to weaken protections that safeguard private user information, making consumers more vulnerable to malicious actors. By forcing companies to change the way they operate, these requirements could strip away security features that millions depend on to keep their personal information safe.
At the same time, these new enforcement actions risk putting U.S. companies at a competitive disadvantage compared to their foreign competitors. Experts fear that policy changes requiring American businesses to share sensitive information could give foreign competitors access to IP and other trade secrets. Additionally, regulations dictating how U.S. companies can provide their products and services to consumers risk stifling innovation and could give a leg up to foreign companies that do not have to play by the same rules.
These recent DMA enforcement actions could well result in unintended consequences for consumers and businesses, and jeopardize American global tech leadership. Fortunately, the White House recognizes these risks and has pushed back against the DMA and similar proposals in other jurisdictions that could stifle competition and innovation. Hopefully, American officials will continue to support a digital agenda that encourages innovation and protects consumers from harmful policies.
