How EU’s Digital Markets Act Changes Big Tech
For the first time in history, the European Commission designated six big tech companies as gatekeepers to the digital industry. In total, 22 core platform services have been designated this status, and each of their respective companies is given a six month timer to ensure full compliance under the Digital Markets Act (DMA).
The Commission is still ongoing other investigations during this time, but the big announcement in September designating these companies as gatekeepers is already going to be making substantial changes to how big tech functions. After all, as gatekeepers who are required to follow DMA standards, they have to abide by several do’s and don’ts.
It Allows Smaller Businesses To Thrive
The biggest problem with big tech is their ability to put a halt to commerce. With their rapid growth being largely unchecked for this long, they’ve been able to stomp out any competition. With the DMA rules, we already know gatekeepers must allow certain third parties to perform specific actions, such as:
Being allowed to conduct business with a client off of their platform.
Businesses must be allowed to access data that they generate on gatekeeper platforms.
When advertising on the platform, businesses are given all the tools and information needed to carry out independent verification
A lot of companies already offer these sorts of insights, like Alphabet’s Google Analytics or Meta’s statistics, whenever you create ads on Facebook or Instagram. However, under DMA, this solidifies further transparency, which bolsters confidence within those services.
It’s good for businesses if they are given a wealth of data to work with and can use that information for further business and growth. The more reliable the data is, the easier it becomes for businesses.
Featured: What Is The SASB Materiality Map?
It Means No Self-Brand Favouritism
Gatekeeper platforms like Amazon have a home-field advantage when it comes to selling products. For a lot of businesses that sell products, there are very few marketplaces available, none quite as large as Amazon. It’s a given that if you’re selling products or books, you’ll have to deal with Amazon.
But it becomes problematic for businesses if Amazon takes your product idea and converts it into one of their products. Small businesses have historically been squeezed out of Amazon through these methods.
Similarly, platforms like Google and Meta might force small businesses to spend more money on advertising or be reduced to irrelevancy due to them prioritising their own features, such as snippets, Youtube videos, and additional relevant questions that Google presents searchers with.
All in all, it creates more visibility for businesses, and they don’t risk closing business due to these gatekeepers prioritising their products and services.
It Means More User Protection
Advertising is one of big tech's massive revenue streams, and under the DMA, gatekeeper services now have to gain explicit consent from users before they can even track a person. Beyond that, there are certain practices that they can no longer do, such as tracking users long after they leave the respective platform.
It Means More Apps Across More Platforms
For decades, Apple and Google’s app stores have been the primary source for apps, and they get to dictate who stays and who goes. While this could be argued to protect users, it also blocks any alternative app stores to be created or other apps to be used. What the DMA enables is for users to pick and choose what apps they want, and it can encourage exclusivity deals once there are more competitive app stores available.
Related: Top 8 ESG Reporting Software in 2023
It Means More Competition And Better Business
Ultimately, what the DMA has allowed is a massive push to break up a powerful oligarchy in the tech industry. For decades, these companies have stomped out competition and prevented newer and better solutions from being put forth to even challenge the status quo.
And while big tech is still going to have a ton of resources and offer great services, these new mandates will force them to self-regulate better and in a way that users can benefit, and so will companies.
Keep up with news and views from ESG at our Featured Articles.