Home PublicationsCommentary Event Recap: How Can the EU’s Digital Markets Act Unlock the Power of Data?

Event Recap: How Can the EU’s Digital Markets Act Unlock the Power of Data?

by Christophe Carugati

The Digital Markets Act (DMA) is the European Commission’s proposal to regulate large online platforms acting as “gatekeepers” with a list of ex-ante obligations and interdictions, and in case of non-compliance, high fine and potential divestiture. Some rules of the DMA concern data, and it is unclear whether they are justified or could be effectively implemented. Against this background, the Center for Data Innovation hosted a panel discussion with stakeholders and policymakers on how the DMA can unlock the power of data. 

The discussion started with a presentation of the rationale for the DMA by Thomas Kramler, head of the unit dealing with e-commerce and the data economy in the European Commission’s Directorate General for Competition. Mr. Kramler explained that the DMA is intended to complement competition law with a twofold goal: contestability and fairness. Contestability goes beyond the current competition law’s goal as the latter only focuses on the abuse of a dominant position, whereas the former targets structural issues (e.g., data accumulation). Fairness aims to restore imbalance between parties where there is a dependent relationship with a firm that does not necessarily hold a dominant position, especially in a business-to-business (B2B) context.

In particular, regarding data-related rules, originating from the Commission’s experience in data-driven cases, they aim to address three issues: data accumulation from various products and services raising entry barriers; disintermediation between consumers and businesses enabling gatekeepers to collect data on both sides without sharing those data with businesses; and lock-in users where they might find it is difficult to switch from one service to another, especially if they have to transfer their data. In this context, the DMA imposes a set of data-related interdictions and obligations such as the prohibition to combine personal data from different sources unless users affirmatively consent to prevent data combination and to lower entry barriers.

Marshall Van Alstyne, Questrom professor in management at Boston University, questioned whether the data-related requirements can achieve the DMA goals of contestability and fairness. While supporting the goals, Dr. Van Alstyne proposed to improve them by adding wealth creation to the objectives. He also argued that rules should be actionable so that data can be reused in similar contexts to keep their value. Furthermore, he argued that rules should prevent firms from selectively porting their data, such as to prevent a business from misleading consumers by only transferring five star reviews from one platform to another. To overcome these issues, he suggested, with Dr. Geoffrey Parker and Dr. Georgios Petropoulos, a new right called in-situ rights, which is the ability to use data where it is located, inspired by the payment services (PSD2) directive. The latter allows third-party access to real-time bank data, creating competition on top of that data while being actionable. The concept of in-situ rights is to move the algorithms to the data through application programming interfaces (APIs) rather than the data to the algorithms. In this regard, both Mr. Kramler and Dr. Andreas Schwab, MEP at the European Parliament and rapporteur of the DMA, noted that the DMA might adopt an approach similar to the PSD2 directive regarding data access requirements during the legislative process. 

MEP Schwab invited stakeholders to participate in the regulation by proposing initiatives. In this respect, Phillip Malloch, director of economic and social policy at Facebook, pointed out several Facebook initiatives such as the Data Transfer Project co-developed with Apple, Google, Microsoft, and Twitter, enabling users to move their data from one service to another one. While underlying technical issues regarding data-sharing, Mr. Malloch proposed a discussion with stakeholders and regulators to address them effectively and efficiently. In response, Mr. Kramler suggested that the industry should develop standards with the regulator’s help as standardization is crucial to seamless data exchange.

Karina Stan, director of EU policy at Developers Alliance, highlighted the importance of the data-related requirements to software developers. While agreeing with the concept of participative regulation, she stressed the need to design coherent rules with other regulations that minimize unintended consequences. In particular, co-legislators should set the right objectives, namely promoting innovative new products and services or creating substitute products and services. In addition, defining rules that are future-proof with other use cases while providing incentives to invest in collecting and processing data is essential.

Finally, on the DMA in the international context, MEP Schwab underlined that the existence of similar concerns around the globe should imply similar solutions. While noting that the Commission should not have too much power, he called for a reversal of the burden of proof, where companies should prove the absence of wrongdoing to speed up enforcement.

The discussion closed with the necessity of a participative regulation that minimizes unintended consequences and creates value to the community.

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