Women@CompetitionDE Talk on Digital Markets Act

On March 11th, our manager, Pauline Affeldt, delivered an insightful presentation on Big Tech acquisitions in the app industry at the W@CompetitionDE Talk DMA – Let’s go! in Berlin, an event co-organized by Elżbieta Głowicka and Pauline Affeldt and hosted by Blomstein. The event was attended by over 50 participants who engaged in lively discussions centered around the Digital Markets Act and the legal and economic challenges in implementing and enforcing it effectively.

The key insights from the talk were:

• The DMA is the first ex ante regulation of big tech firms and it reverses the burden of proof compared to competition policy tools.
• In best case, the DMA will lead to more competition on the existing platforms and help firms at the edge of becoming big to compete with gatekeepers.
• The panelists agreed that it is unclear whether the DMA will be able to significantly lower the market power of gatekeepers.
• Gatekeepers have many means to secure their position, since many business practices are difficult to prove and transparency is missing.
• The ban on self-preferencing might lower commissions for third-party sellers, but it is also likely to affect the profitability of product offerings by the hybrid platform.
• Transparency of gatekeepers’ acquisitions may facilitate more transactions being investigated and remedied or prohibited under merger control.

Pauline highlighted in her presentation that most Big Tech acquisitions were not investigated by competition authorities since they did not reach traditional notification thresholds of merger control that look at turnover or the number of employees. Under the DMA, gatekeepers will now have to inform the European Commission about all their acquisitions. This increased transparency of gatekeepers’ acquisitions may facilitate more transactions being investigated and remedied or prohibited under merger control. Pauline further presented her joint research with Reinhold Kesler investigating competitors’ reactions to GAFAM acquisitions using data from the Google Play Store. The results show that competing apps innovate less following app acquisitions by GAFAM. In addition, affected developers reallocate innovation efforts to unaffected apps and affected markets experience less entry post-acquisition.

Full presentation can be found by the link.