Google Warns EU Digital Markets Act Stifles Innovation, Hurts Businesses

Google has issued a warning to the European Union (EU) antitrust regulators, expressing concerns that the bloc’s Digital Markets Act (DMA) is stifling tech innovation and negatively impacting businesses and consumers. The search engine giant is expected to present its arguments, urging regulators for more detailed guidance to assist in compliance with the rules while challenging critics to provide evidence of costs and benefits to support their claims.

The DMA is a key component of the EU’s strategy to curb the powers of Big Tech and imposes a stringent set of regulations on firms designated as “gatekeepers” due to their control over platforms that serve as gateways to markets. The regulations aim to create a more level playing field, allowing smaller competitors a better chance to thrive. However, Google argues that these measures have unintended consequences, slowing down innovation despite their intended purpose of promoting competition.

Google is currently under significant pressure to address charges under the DMA that it has an unfair advantage and favors its own services, such as Google Shopping, Google Hotels, and Google Flights, over competitors. These charges could potentially result in fines amounting to 10% of the company’s global revenue. In response, Google has proposed changes to its search engine results to showcase products and services from its rivals.

Clare Kelly, a legal representative for Google, is expected to express the company’s concerns at a workshop organized by the European Commission, which aims to provide Google critics with an opportunity to seek clarifications. Kelly will highlight that the changes Google has implemented so far, following discussions with the Commission and critics, have led to European users paying extra for travel tickets as they cannot directly access airline sites. She will also indicate that European airlines, hotels, and restaurants have reported up to a 30% loss in direct booking traffic, while users have complained about clunky workarounds.

Oliver Bethell, another Google lawyer, is expected to ask regulators to provide detailed instructions on what the search engine giant needs to do, while also requesting that critics present solid evidence. Bethell will emphasize the importance of understanding precise compliance requirements, both in theory and in practice, to launch compliant services quickly and confidently across the European Economic Area (EEA).

Google’s concerns are shared by other tech firms, with a survey of European tech founders revealing widespread apprehension over the bloc’s regulatory environment. The survey results primarily cited the DMA and the General Data Protection Regulation Act (GDPA) as creating a challenging environment for emerging businesses, placing them at a disadvantage compared to their global competitors. Recently, social networking firm Meta announced its intention to challenge some parts of the EU’s crackdown on Big Tech market dominance, accusing the bloc of bias against its business.

The EU remains steadfast in its belief that its regulations, particularly the DMA, are essential for promoting competition and limiting the dominance of a few large corporations. The bloc argues that these rules will ultimately benefit ordinary consumers by fostering a more competitive market.