In a major move to regulate digital platforms, the European Union (EU) has fully implemented the Digital Markets Act (DMA), a law that impacts six prominent tech companies, five of which are American-based. The DMA aims to promote competition by restricting certain practices of internet "gatekeepers." While European regulators argue that the law was applied based on neutral criteria, it has raised concerns and sparked protest from U.S. industry associations and lawmakers.

Prior to the implementation, several industry associations expressed their discontent to President Biden, claiming that Europe had used "subterfuge" to limit the activities of U.S. companies. Members of Congress also criticized the law, labeling it as discriminatory towards U.S. firms and workers, while warning of potential advantages for China and Russia. The Biden administration, while sending letters of protest to Brussels, chose not to escalate the issue further due to its focus on other pressing matters such as the ongoing conflict in Ukraine and the challenge posed by China.

Under the DMA, companies like Apple, Google, Meta (formerly Facebook), Microsoft, and Amazon have been required to make significant changes to their services. Notably, Apple will allow third-party app stores on iPhones for users in the EU, breaking open its closed ecosystem. Google will present Android users with a "choice screen" to easily switch web browsers and search engines. Meta will allow other messaging services to connect to WhatsApp and Messenger, giving users the option to unlink their Facebook and Instagram accounts. Microsoft is granting EU users the ability to disable Bing search in Windows, while Amazon will seek consent from EU customers for personalized ads. Additionally, TikTok is enabling EU users to download their entire data history.

This groundbreaking law has made the EU the first major jurisdiction to regulate digital platforms in such a comprehensive manner. The DMA's focus on fostering competition on the platform itself rather than replacing it has drawn praise from economists, including Fiona Scott Morton, who stated that the law's approach can potentially increase competition.

However, the fact that five of the six companies subject to the DMA regulations are headquartered in the United States has drawn criticism from U.S. industry groups. They argue that the law unfairly targets American companies and could have negative consequences for U.S. tech firms. EU officials maintain that the criteria used to identify internet "gatekeepers" were applied neutrally.

The European Commission has emphasized its preparedness to swiftly enforce the DMA, with potential fines of up to 20 percent of a company's global revenue for repeat offenders. E.U. officials are confident that any noncompliance cases will be resolved within a year.

The immediate impact on U.S. consumers is expected to be limited, but economists suggest that other nations may follow the EU's lead in implementing similar regulations. While some lawmakers in the United States have attempted to introduce similar regulations, such efforts have faced significant challenges. The skepticism towards antitrust regulation is greater in the U.S. compared to Europe, evidenced by budget reductions proposed for the Justice Department's antitrust division.

The divide within the Biden administration reflects differing opinions on whether it should prioritize supporting U.S. Big Tech companies or promoting competition and consumer protection. The administration has faced criticism both for being too critical of the DMA and too supportive of it, leading officials to tread carefully on the matter.

As the Biden administration continues to navigate these conflicting views, discussions with EU counterparts regarding the DMA have largely remained confidential. The administration has prioritized security issues in recent talks with the EU, particularly relating to the conflict in Ukraine and containing the influence of China.

Although the DMA has evoked mixed reactions, it represents a significant shift in the regulation of digital platforms and is expected to have far-reaching implications for the future of competition in the tech industry, both in Europe and potentially beyond.