Landmark Legislation to Regulate the Digital World

Late on Thursday evening, the relevant European institutions agreed on new rules for the digital world. The Digital Markets Act (DMA) bans harmful business practices of large digital players that act as ‘gatekeepers’ and imposes others on them. For example, user data from different services may no longer be combined for advertising purposes without explicit consent, and messenger services on these large platforms must be compatible with other messenger services. Professor Achim Wambach, president of ZEW Mannheim, explains:

“The DMA is Europe’s answer to the two major shortcomings in controlling abuses of market power in the digital world: the proceedings take a very long time and the resulting remedies are not precise enough. Other countries, such as the UK, South Korea and also Germany, have taken their own measures to address these shortcomings. While commissions around the world have identified various aspects that are important for the design of a new regulatory regime in recent years, the time for implementation has now come. As many questions are still open, the variety of regulatory approaches is also an advantage, as it allows experience to be gained with the regulatory instruments. While the rule-based approach of the European Union shortens the duration of proceedings, it will have to be seen to what extent the measures are effective and targeted enough to ensure sound competition in the digital markets. As the business models of gatekeepers are very different – and the rules therefore have different effects – it will also be necessary to allow for some adjustment of the rules to specific situations. Enforcement of the rules will therefore be crucial.”