EU regulation may confine Europeans to a ‘European internet’

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BrusselsReport.eu
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By Jason Reed, project manager and policy analyst with Young Voices

After years of bureaucratic wrangling, the EU’s Digital Markets Act is now seeing the light of day. Since its proposal in December 2020, experts and observers have been warning about the intrusive effects the DMA would have on apps and website millions use daily. Unfortunately, Brussels didn’t listen. Now that the law is coming into effect, those warnings are coming true.

The DMA takes a scattergun approach to antitrust. It mushes together concerns about competition, privacy, sales tactics and more to create a legislative behemoth whose consequences are far-reaching. Alongside the Digital Services Act, the DMA identifies a handful of ‘gatekeepers’ – large, mostly American technology companies – and introduces a long list of new rules about what their products can and can’t do.

The results are now becoming clear. Google Maps operates differently for EU users now that the DMA has come into force. Europeans can no longer click on the interactive map which pops up when they search for a location on Google; they must now manually open Maps. Meanwhile, a pop-up screen has appeared for Facebook Messenger users in Europe asking if they want to create a new Messenger account, separate from their Facebook account. There have been similar changes to iOS, Google Flights, WhatsApp, the App Store, and some Microsoft products.

For now, these are minor inconveniences, but they carry a stark message about the future of the technology industry in Europe. The EU is actively and needlessly creating a hostile environment for tech companies. Brussels is making clear to investors, entrepreneurs, and anyone else who might be considering doing business in Europe that innovation and convenience for consumers counts for less than regulators’ whims.

The arguments for the DMA don’t stack up. The DMA’s thesis is about preventing tech companies from prioritising their own products above their competitors’. That’s why regulators want to make it more difficult for Google to present Google Maps to users, or for iOS to encourage iPhone users to download apps from the App Store, for example.

Micromanaging consumer interfaces like this is wholly unnecessary and an archetype of regulatory overreach. When I search for a location, Google displays a clickable map alongside the search results for my convenience. I am still free to exit Google and look up the location on Apple Maps, Waze, or anywhere else of my choosing. If I disliked Google Maps so strongly that I had a problem with even seeing the map, I could use another search engine like Bing, Yahoo or DuckDuckGo.

But very few consumers choose to abandon Google for another search engine. Why? Because there’s no disadvantage to Google integrating Maps into search. If there was, Google wouldn’t do it. The market takes care of problems like this much better than any regulator can. If it were an issue for consumers, they would vote with their feet by using other services, and Google would either change its approach or lose users. The same logic applies to Facebook Messenger, Apple’s App Store, and the various other products the DMA affects.

The DMA’s market interference is far from harmless. The EU is signalling a willingness to erect barriers to innovation. That’s a dangerous path to go down. It creates the real possibility that non-European companies, such as American tech giants, will launch new products and services for everyone except those in EU member states.

As Brussels ratchets up the cost and hassle of operating in the EU, companies like Microsoft and Meta might calculate the extra cost of creating a custom product for EU users to cater to the bizarre, ultra-specific preferences of European regulators is not worthwhile. The EU accounts for less than 15% of the global economy and less than 6% of the world’s population.

That means instead of forcing foreign companies to bend to their will, EU regulators risk cutting European consumers off from free products and services the rest of the world continues to enjoy. The ‘European internet’ will become smaller, less intuitive, and less helpful than the internet everyone else uses.

At the heart of this issue is democracy. Ordinarily, a regulator in a liberal democracy enacting sweeping regulations of this kind would fear repercussions at the ballot box. But in the case of the EU, what people think is not a major concern. European Commission president Ursula von der Leyen, for example, knows to secure her coveted second term, she does not need to win over an entire electorate, but instead a tiny ‘selectorate’ of Brussels powerbrokers.

The EU’s endgame remains unclear. There is no end in sight to Brussels’ antitrust ambitions, or indeed its desire to exponentially expand regulation more broadly. While European regulators brainstorm new ways to clip Silicon Valley’s wings, punishing innovators for the convenience and success of their products, the chasm in economic growth and living standards between the US and the EU only widens.

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