Is the DMA a chicken or a duck? Why the DMA predestinates European companies and consumers to lose
“If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.” The DMA looks like a duck, swims like a duck, and quacks like a duck — yet many insist it is a chicken.
This article is authored by Pál Szilágyi - Director of the Research Centre of Competition Policy and Future Economies and a Technology blogger at Techpozitiv
The DMA was originally conceived as an instrument of competition law. Even though its positioning has since grown more nuanced, it was built on flawed conceptual foundations and those foundations will continue to haunt it.
A useful reminder first. Almost exactly three years ago, then-Competition Commissioner Margrethe Vestager was already anticipating the dangers of the Metaverse and OpenAI. She warned:
“We have certainly not been too quick to act - and this can be an important lesson for us in the future. We need to anticipate and plan for change, given the obvious fact that our enforcement and legislative process will always be slower than the markets themselves. For example, it is already time for us to start asking what healthy competition should look like in the Metaverse, or how something like ChatGPT may change the equation.”
Sometime around five to seven years ago, a fundamental shift in the mindset of European regulators became apparent. They began attempting to prevent harmful technologies from emerging before those technologies became widely adopted. The goal is laudable; the execution has proven damaging - to European businesses and consumers alike. The reason is not difficult to see. Roughly three years after Vestager's warning, Meta announced it was shutting down Horizon Worlds in June (note: that decision was reversed by Meta shortly afterwards). The episode is a timely reminder that regulators are notoriously poor at predicting market outcomes.
One could cite countless similar examples from recent years, not least the EU AI Act, which contained inconsistencies and assumptions that were already outdated by the time it entered into force.
At a recent visit marking the 35th Anniversary of the Hungarian Competition Authority, US Federal Trade Commission Chair Andrew N. Ferguson offered a pointed diagnosis of Europe's predicament:
"over-regulation and over-vigorous competition enforcement has diminished Europe's ability to compete [...] It is no coincidence that nearly every firm declared a 'gatekeeper' by the European Commission under the Digital Markets Act is an American firm."
In Europe, big tech may appear large, but size does not equal dominance and it seems we somehow forgot this lesson. For example, Microsoft, arguably the most strategically well-positioned company in the sector, has at the time of writing failed to make meaningful inroads in social media, consumer search, or the LLM market at scale.
Premature regulation, however, is not the only symptom of this problematic regulatory attitude. DSA architect Thierry Breton sent a letter to X and indirectly to Elon Musk with a warning that streaming an interview with a US presidential candidate could constitute a DSA violation. The presumption of guilt embedded in that letter was unmistakable.
Lazar Radic recently articulated what many have long suspected: the DMA and its enforcers treat "Amazon.com like a 19th century railroad." Similar misconceptions permeate regulatory thinking toward other American tech giants. We must take note that this mindset predestines European companies and consumers to lose.
The parallel with telecommunications industry regulations is instructive and sobering. When telecoms were regulated, European countries owned the underlying infrastructure, and European companies were competing on it. In the 21st century, however, Europe has effectively conceded the digital infrastructure layer - today's platforms - to US firms. Regulators have responded by applying the same logic they used for telecoms decades ago: regulate access and enforce non-discrimination. Few have grasped the fatal flaw in this approach. It means that even European companies that want to challenge US incumbents are basically forced to compete on the platform rather than for the market. That is a battle that cannot be won. Victory is only possible by competing the market away entirely.
To conclude: the DMA, along with other recent tech regulations, is a symptom of a failed regulatory philosophy. What makes this even more troubling is that abolishing the DMA alone would not solve Europe's underlying problems. What is needed is large-scale deregulation, dismantling a significant body of EU regulations and directives combined with a serious acceleration of the near-dormant enforcement of internal market rules. Because to own the market, you must be viable and efficient across all five layers of the "AI cake" (to borrow Jensen Huang's apt framing).
The European Union needs an approach so bold that Javier Milei would envy both its speed and its conviction.
This will not happen, cannot happen, without radical institutional change. And radical change appears almost structurally impossible given the EU's institutional architecture.
A reminder is vivid in many CEE countries. Within the Soviet Union, success was always measured relative to other failing states. Objectively, however, even relative success within the system amounted to failure when benchmarked against the outside world and it was only a matter of time before reality made that plain. Every politician, legislator, and regulator would do well to remember: the law of supply and demand cannot be defied. It can only be suppressed at ever-increasing cost to citizens and local businesses. The DMA is a duck, not a chicken. The DMA is not regulating competition, it regulates failure.