On April 28, the European Commission published the first statutory review of its much-vaunted Digital Markets Act (DMA) of 2022. Under the act, seven companies (Alphabet, Amazon, Apple, Booking.com, ByteDance, Meta, and Microsoft) providing 23 core platform services (covering search, messaging, identity-matching services, app stores, operating systems, and digital marketplaces) have been designated “gatekeepers” that are subject to stringent ex ante regulatory obligations.

These firms, which are perceived to enjoy economic advantages due to their size and the specific characteristics of the digital markets they participate in, are constrained by the DMA’s provisions from engaging in specific activities in the European Union for fear that they could use their market powers to create less competitive (or more “unfair”) digital markets in that jurisdiction. Banned activities include:

• Self-preferencing—ranking their own products or services more favorably than similar third-party offerings on their platforms (e.g., in search results or marketplaces);
• Data combining without consent—combining personal data from a core platform service with data from any other of their services (or third-party sources) without consent;
• Anti-steering—preventing business users (like app developers) from promoting their own offers to customers or concluding contracts outside of the gatekeeper’s platform;
• Mandatory service tying—requiring users to subscribe to or register for additional services (like identification services or payment systems) as a condition for using a core platform service;
• Preventing uninstallation—stopping users from uninstalling any preinstalled software or apps if they wish to do so, provided it doesn’t compromise the operating system’s core functioning;
• Using nonpublic business data—using private proprietary data generated by business users on their platform to compete against those same business users; and
• Blocking alternative app sources—preventing installation of third-party apps or app stores that use or interoperate with their operating system.

Unlike the United States, which relies on traditional antitrust law to govern such behavior, intervening ex post only when harm has been demonstrably exhibited, the EU has adopted a precautionary approach, using ex ante regulation to prevent these activities, even if they would not cause any harm in a specific instance. Designated firms must comply or face fines of up to 10 percent of worldwide turnover (rising to 20 percent for repeated infringements).

The DMA has proved contentious. Supporters see it as a means by which European firms, and new entrants to digital markets in particular, may overcome barriers posed by incumbent firms’ advantages and build European-domiciled firms to challenge US and Chinese gatekeepers. Critics, on the other hand, assert that the law’s prescriptive prohibitions are overly harsh and lead to loss of efficiencies, innovation, and market opportunities, particularly in Europe but also in other jurisdictions, if the gatekeeper firms adjust their worldwide offerings to become EU-complaint.

The statutory review, therefore, has been eagerly awaited. It is the European Commission’s first assessment of the DMA’s effectiveness in achieving its objectives and, importantly, where it is falling short or invoking unintended or unwanted consequences. The headline finding is that the act remains “fit for purpose” after its first two years of full operation. The review declares that the law has already made EU digital markets “fairer and more contestable,” opened opportunities for business users (including small and medium-sized enterprises), and given end users more control and more diverse services. Consequently, the review proposes no amendments to the act, although it identifies further work required in areas including “developments in AI services” and any resulting enforcement gaps that might justify designating additional firms as coming within the regulations.

However, the review has been roundly criticized for being one-sided and institutionally biased. One think tank has accused the commission of “mark[ing] its own homework” and setting the scope of the inquiry so narrowly that it includes only assessments of the acts’ benefits while ignoring very substantial costs to both gatekeeper firms and the economy more generally. Another think tank scathes the commission for prioritizing “more control / more choice” narratives while downplaying or ignoring evidence of user harm, degraded services, and delayed innovation. Both criticisms are valid: The staff working document accompanying the report is conspicuous for acknowledging that the evidential basis comes primarily from stakeholder responses to a request for information and does not include any responses from gatekeeper firms. Neither does the commission appear to have canvassed the peer-reviewed academic literature, where quantitative analysis has appeared, including at least one study that has found the DMA has had a significant chilling effect on innovation and another dispelling harm actually arising from specific self-preferencing.

The message for United States policymakers is clear. The EU’s finding of the “success” of its DMA lacks credibility, as it falls far short of the kind of comprehensive cost-benefit analysis normally considered necessary to assess the efficacy of such significant and far-reaching legislative change.