Big Tech is watching you ...

So, who's watching your digital rights?

Digital services play a central role in our lives. Over 77% of all Europeans use the internet daily and that figure rises to 92% for 16–29-year-olds. Shopping, searching, chatting, sharing experiences and opinions, streaming videos, tracking physical achievements ...

The pandemic has benefited Big Tech and COVID-19 isolation measures have only amplified their central role. The market value of these companies is now at an all-time high. But as the digital economy continues to grow, so too do the concerns around safety, user rights and its influence on society.?

Chasing the ‘Big Five’

An international move towards increased regulation is currently underway; in the United States, China, and also in Europe, where the European Commission recently presented the Digital Services Package - a package composed of two closely related legislative initiatives.

The Digital Services Act (DSA) is the generic legal framework that applies to any digital service - from simple websites to global platforms and service providers. Its goal is to “create a safer digital space in which the fundamental rights of all users of digital services are protected.”

The Digital Markets Act (DMA) raises the issue of competition in the digital sector and promises to reshuffle the deck in digital markets that have become 'oligopolistic'.?It aims to get a better grip on a handful of (mostly American) tech giants - which Thierry Breton refers to as "too big to care about legitimate concerns around their role". And while the Commission hasn’t named any companies, its criteria to qualify as a gatekeeper, are sure to catch at least Amazon, Apple, Facebook, Google, Microsoft.

Identifying the 'Gatekeepers'

To date, there has not been a limit to how big these so called ‘Big Tech’ companies can get. With more data fueling their algorithms, the recommendation engines of these platforms are rapidly outpacing others. And with increasing scale comes a lower marginal cost to add more services, which in turn makes it easier to extend their reach and undersell the competition.

Consumers mostly gain access to other digital platforms via a small number of service providers such as Apple, Google or Facebook. Consequently, these service providers act as a virtual access layer on top of the digital markets and often operate as an exclusive gateway between businesses and their customers.

The DMA's challenge is to define the size at which a platform can be considered to be a 'Gatekeeper'? The Commission retained quantitative and qualitative criteria. Deciding ?which platform is "systemic" is a complex and mainly political exercise. It is so strategic that all the players are trying to influence the definition.

What the consumer can expect

The will to put an end to anti-competitive practices by the biggest platforms is the main direction of the regulation. The Commission aims to stop gatekeepers from imposing unfair ‘take-it-or-leave-it’ conditions on users and customers.?

The examples of closed ecosystems - where the dominant player favors its own services - will also be a main topic. What will be forbidden ?for example is the practice once adopted by Google of putting its "Google Travel" reservation system at the top of the results on its search engine. ?In the same way, the question of anti-competitive practices arises for Amazon, which is both a sales platform for third-party companies and a direct competitor with its own products.

There is every reason to believe that platforms that adopt this type of practice will gradually put an end to certain procedures in order to avoid the sanctions provided for by the DMA. This evolution reflects a paradigm shift in competition policy: from control which is only capable of identifying distortions of competition, to regulations that aim to prevent the creation of these distortions in the first place.

Encouraging the emergence of abundant ecosystems

In the end, the issue is not so much about weakening these companies, an objective that would go against the very idea of competition, but rather to encourage the emergence of new players within a more open digital ecosystem.

In concrete terms, the DMA will force gatekeepers to open access to their services (interoperability), to transmit end-user data to companies (data sharing) and ultimately allow third-party companies to enter into contracts and pursue business relationships outside of the systemic platforms.

The application of the DMA and its obligations (such as additional transparency) should bring more diversity to the digital markets. Despite its scope, the regulation will not directly end the dominance of systemic platforms because they have been able to create coherent ecosystems that put the customer experience at the center of the value proposition.

Nevertheless, the measures proposed by the European Commission will allow the emergence of new alternatives for consumers. If the DSA enables us to question our relationship with digital services, there is no doubt that the DMA will question our collective dependence on digital giants.

Frederik Claessens

Ecommerce Expert & Sr Business Analyst

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Don't forget to also check out my other articles:

• Digital Services Act: what will change for EU citizens
• Ecommerce in B2B ... or not 2B?
• Smart Assistants are the New Gatekeepers
• Adapt or Disappear: The speed of digital transformation continues to disrupt the wholesale industry.