Regulating the Giants: The Promise of the Digital Markets Act
The Digital Markets Act (DMA) has become a focal point of discussions, not only in Europe. However, opinions vary on whether it strengthens competition among companies or diminishes their online visibility. In this article, we delve into what the new regulation entails and its implications for your business.
What is the Digital Markets Act?
The Digital Markets Act (DMA) is a regulation crafted to ensure fair and competitive online trade. Adopted by the European Commission in September 2022, it officially took effect in May 2023.
With the DMA, the European Parliament and the Council of the European Union aim to curtail the monopoly of GAFAM. The objective is to prevent large tech companies from abusing their market power.
GAFAM is an acronym for the world's largest tech companies: Google, Amazon, Facebook, Apple, and Microsoft. But since Facebook is now called Meta, the new acronym is GAMAM. Other terms commonly used for these major players include Big Tech or Big Five.
One regulatory measure is the designation of large online platforms as "gatekeepers”. These have been accused of hindering free competition by promoting their own offerings AND making other companies dependent on them.
Companies are considered gatekeepers if they, over the last three fiscal years:
have a strong economic influence in the digital market,
are used by many companies,
are active in multiple EU countries.
To mitigate their dominant position, gatekeepers are now subject to stricter regulations.
The Digital Markets Act (DMA) advocates for open digital markets with the aim of creating fair competition for all market participants. The Digital Services Act (DSA), on the other hand, targets the dissemination of illegal content on digital platforms. This includes hate speech, child pornography, or terrorism.
Impact of the Digital Markets Act (DMA) for Businesses
Embracing the Digital Markets Act (DMA) unlocks a myriad of benefits for multi-location businesses, promoting fairness, transparency, and growth in the competitive landscape of online marketing.
1. More Fairness
With the DMA, all market participants have equal opportunities in online trade—because gatekeepers are no longer allowed to favor their own offerings by, for example, preselecting search results.
2. More Transparency
Through the DMA, companies gain access to the data generated on gatekeeper platforms. That way, they can make informed choices based on insights into product or service performance, consumer preferences, and behaviors.
3. More Certainty
With the new regulation, companies receive clear guidelines for dealing with gatekeeper platforms. This means an end to unilateral terms and conditions—because commercial users have rights, and gatekeepers have obligations.
Gatekeepers must, for example, enable companies to:
promote their offerings and engage in independent advertising
conclude customer contracts outside the platform
Conversely, Gatekeepers are no longer allowed, among other things, to:
favor their own products or services in terms of order
prevent consumers from reaching companies outside the platform
These regulations are in the interest of both commercial and private users.
Impact of the Digital Markets Act (DMA) for Consumers
For end consumers, the Digital Markets Act (DMA) marks a pivotal moment, too, with enhanced protection, greater choices, and heightened data security.
1. More Consumer Protection
The Digital Markets Act restricts the monopolistic position of the largest online platforms, ensuring fair competition that leads to lower consumer prices. Additionally, the new regulation prohibits unfair practices such as manipulative advertising to protect users from disinformation, and such.
2. More Data Security
The DMA restricts the use of "Terms and Conditions," giving consumers more control over their data. Specifically, gatekeepers will need explicit consent from users and may only use data in a product-related manner. For example, Meta is not allowed to use user data from Facebook for advertising on Instagram.
3. More Choice
The Digital Markets Act gives users the opportunity to use—and switch easily between—alternative search engines and platforms. Additionally, they can delete pre-installed apps, which is intended to prevent unfair competition.
How Does the Digital Markets Act Affect Google?
The European Commission has designated Google as a gatekeeper under the Digital Markets Act (DMA). Google, on the other hand, states to acknowledge the requirements and make changes to its products /services to provide users with more choices and control.
As Google develops compliance solutions, it emphasizes the collaboration with the European Commission and stakeholders to offer safe products while maintaining a positive user experience. Generally speaking, adjustments aim to restore the balance between the largest online platform and other directories, websites, and the like. So we think that the visibility of Google business profiles may decrease. As a result, local landing pages may receive more online traffic.
Changes to Search Results
Specifically, Google will “introduce dedicated units that include a group of links to comparison sites from across the web, and query shortcuts at the top of the search page to help people refine their search, including by focusing results just on comparison sites" (Google, 2024). A direct impact has already been noticed: the Google Maps widget isn't clickable anymore because Google isn't allowed to prominently position its own services on search engine results pages.
Choice screens and additional consent for linked services
Other changes in the coming weeks will allow Android phone owners to easily switch their default search engine or browser and users of Google services and products to move their data to a third-party app or service. Meanwhile, European users will see an additional consent banner to ask them whether some Google services can continue to share data targeted ads.
“For categories like hotels, we will also start testing a dedicated space for comparison sites and direct suppliers to show more detailed individual results including images, star ratings and more. These changes will result in the removal of some features from the search page, such as the Google Flights unit" (Google, 2024).
DMA Changes in Google Local Search
While the Digital Markets Act will not be fully effective until March 2024, Google has already implemented changes to comply to the new regulatory framework.
Here’s a few things we noticed so far:
Google 3-Pack
The classic 3-Pack, or the carousel with product listings at the top of the page, are less likely to be displayed in the EU. For search terms like “supermarket”, it is more likely for users to see a section called “place sites” with alternative business directory website results. Product carousels might also move further down in the search results, appearing after up to 3 website results.
Inventory
“See What’s In Store” moves down on the search engine results page, too, spreading out over sections in-between other results from the web. Moreover, a click will bring users to a new search results page, displaying products in that category stocked by different retailers.
Learn more about the new Google guidelines
How can I prepare for the Digital Markets Act?
As the Digital Markets Act takes center stage, companies can proactively prepare by optimizing their online presence.
Tip #1: Optimize Your Google Business Profile
Ensure a compelling first impression by optimizing your Google Business Profile. Complete all relevant information, use high-quality visuals, and encourage positive customer reviews. This not only enhances your online visibility but also boosts local SEO, making it easier for potential customers to find and choose your business.
Tip #2: Expand Your Online Presence
Go beyond the limitations of a single platform by diversifying your online presence. Be visible on various platforms and networks relevant to your industry. Consistently update and monitor information on crucial online directories, ensuring that your business maintains a robust and accurate presence across the digital landscape.
Tip #3: Build Local Landing Pages
Capitalize on DMA opportunities by creating local landing pages. Tailor these pages to specific geographic areas, providing potential customers with all the essential information they need. This strategic approach not only drives more online traffic but also increases the likelihood of offline conversions, contributing to overall business success.
What sanctions do companies face for not complying with the Digital Markets Act?
The Digital Markets Act holds substantial significance for the European Union, posing potential fines and penalties for companies. The effectiveness of this legislation, however, hinges on the accurate interpretation and enforcement of regulations.
Despite skepticism from tech giants like Google and Apple—who argue that the DMA may impede data security and innovation—the act undeniably marks a significant stride toward fostering fair and transparent e-commerce. If you aim to proactively prepare for its implications, our team is ready to provide you with the essential tools for your online marketing strategy.
Future proof your business with Uberall