Some time ago, I joined a panel discussion asking a very timely question about Europe’s digital future: Is the Digital Markets Act (DMA) levelling the playing field for EU businesses, or limiting their potential?
The DMA was designed, in the words of our moderator, to “dismantle barriers imposed by dominant firms” – the so-called ‘gatekeepers’ – and “enable smaller firms to compete more effectively.” Yet our discussion made it clear that reality is more complicated than it seems.
Far from simply reining in gatekeepers, the DMA appears to be causing measurable harm to the very businesses it was meant to help. The Act is disrupting the digital ecosystems that countless European businesses rely on to innovate, reach customers, and grow.
So, if Europe truly wants its companies to thrive in the global digital economy, the question is how to do so without the DMA undermining their growth and competitiveness.
1. Unintended economic toll of the DMA
Professor Carmelo Cennamo, co-author of a new study that was launched at this occasion, highlighted the significant costs associated with the DMA. His research, “the first to develop a way to think about and quantify the impact of the DMA,” estimates annual revenue losses of up to €114 billion, “which is an average of 0.64% of turnover across the EU” for the sectors considered, with disproportionate effects on small and medium firms.
“In some sectors, this can go as high as 3.5% to 3.6%, depending on the intensity of digital tool usage.” According to the professor, the two most affected sectors are accommodations and hospitality, with a loss in revenue per worker up to €3,579 per year, followed by retail.
Cennamo explained that these losses stem from four key channels that have been seriously affected by the DMA. First is reduced reach, which means “businesses are less visible in search and ads.” Second is lower personalisation, where provisions that limit consent for data usage reduce targeting precision.
Third, there is a loss of coordination: when the tools of a digital platform don’t work well together anymore, each euro spent on attracting customers brings in fewer actual sales. Finally, “there is an erosion of trust, which comes from increased fragmentation of review and recommendation systems” under the DMA, and fewer safeguards.
He offered a specific example, stating that in the retail sector “personalisation has been estimated to have cut customer acquisition costs by 50%.” Now, however, the DMA’s restrictive consent requirements – which are way more stringent than the General Data Protection Regulation – are causing a “big drop” in click-through rates for targeted ads. As a result, businesses could see their “online sales reduced by approximately 2%.” A rather conservative estimate, the professor underlined.
2. Voices from key European sectors
These findings were echoed by industry representatives on the panel. Sebastian Loerke of Airlines for Europe, which represents airlines carrying 80% of passengers flying in Europe, shared similar data. Loerke stated that “over the past 15 months, since the DMA was launched, […] we see 10 to 20% less user traffic to our direct channels and an increase to intermediary channels, especially online travel agents” because of DMA-mandated changes.
Loerke also stressed that it’s not just traffic flows that have changed since the DMA was implemented, but that there has also been a “dramatic reduction, around 80% less users that visit our websites actually end up booking a flight.” This suggests that with the “removal of some of the features [from search engine results because of the DMA], people are finding it harder to actually find a flight that suits their needs.”
Timothée Giard of the European Hotel Forum, an association for a sector that is “very fragmented, very competitive, and heavily digitalised,” noted that hotels are in a unique position of having to “handle two [types of] gatekeepers”: both DMA-designated core platform services, and intermediary online travel agents like Booking.com.
Giard said that because of DMA-mandated changes to search results “we’ve seen so far a significant drop in traffic, meaning less direct visibility for hotel websites today.” He continued explaining that “less traffic to our direct websites means more traffic to indirect channels and therefore more commissions paid to intermediaries and potentially more ads.”
The European Hotel Forum calls on the Commission for “a solution that not only relies on long-term potential hypothetical benefits but, also takes into consideration short-term immediate quantified harm that we have been seeing in our sector.” The DMA should be about “more choice, diversity of options available for consumers.”
Niccolo Ciulli from EuroCommerce, which represents European retailers and wholesalers, also highlighted the negative effects of the changes imposed on search engine results, which has caused a “loss of visibility and conversion rates” for EuroCommerce’s members. He pointed out that “removing [listing ads] will increase the price of advertising, which would be especially negative for SMEs.”
Ciulli also expressed concerns that organic search results are being “pushed down further and further” on the results page due to the growing presence of non-organic content – such as mandatory boxes featuring intermediary offers required for DMA compliance.
3. The DMA’s fundamental trade-offs
The panel also delved into the core trade-offs of the DMA. Professor Cennamo clarified that his study “isn’t evidence against regulations” but is instead “about understanding the trade-offs” at play. He emphasised “in the digital economy, you have different types of users: end users and business users.” In particular in the case of the DMA, he sees that “anything that comes to the benefit of one group might actually come to the detriment of the other one.” Pointing at the fundamental trade-offs between the interests of European consumers and DMA access seekers in some cases.
He used the consent issue as a clear example of this type of trade-off. Cennamo distinguished between an ‘opt-out’ model, where “90% of the users will still leave the data,” and the DMA-mandated ‘opt-in’ model, where “around 5 to 14% of users are opting in.”
Thomas Kramler, Head of the Digital Platforms III Unit at the European Commission, replied that “the DMA is not an attack on a platform business model.” He argued that there are “plenty of other platforms that need the chance to grow and come up with innovative products in the market.”
Addressing the issue of consumer consent, Kramler questioned that “if consumers really value targeted ads, why don’t they opt for it?” He stated: “I don’t think it is a problem that choice is put in the hands of consumers, and they can decide whether they would like to be served with more targeted ads or not.”
Cennamo, however, argued that for many users “knowing that I’m going to get better targeting isn’t an informed decision, because [they] don’t see the direct benefits.” While intended to empower consumers, this choice ultimately weakens the effectiveness of digital tools , which is “exactly what this study is capturing.”
As the moderator, Matthew Newman, subsequently asked, “does the DMA then put too much focus on intra-platform fairness and thus neglect inter-platform competition?” The panel’s reflections suggest that by focusing narrowly on a few platforms with a one-fits-all approach, the DMA has created unintended consequences for the broader digital ecosystem.
Kramler offered a different perspective, but did acknowledge that, as the Commission “we don’t want to be the designers of diverse platforms. No regulator should be the central designer of the platform business models. The law just puts some boundaries around it, but the DMA should certainly not be seen as a model for designing platforms in depth.” When it comes to featuring intermediaries in search results, for example, Kramler recognised the “need to find a balanced solution that gives visibility. That means trade-offs.”
Conclusion
In my remarks, I stressed the need for a more balanced approach. The DMA’s objectives may be well-intentioned, but its implementation is already inflicting tangible harm on European businesses, consumers, and the region’s digital competitiveness. These impacts must be front and centre in the lead-up to the upcoming review of the Digital Markets Act.
Acknowledging that the DMA comes with serious trade-offs – which, as we heard during the panel discussion, do not necessarily serve the best interests of European consumers or the wider economy – is only the first step. What’s needed now is rigorous, evidence-based policymaking. Hence, the Commission needs to carry out comprehensive economic assessments that take full account of the DMA’s cross-sectoral effects.
To date, the Act has been rolled out with too little consideration for its broader economic consequences. That must change if Europe wants to be not just a regulator of the digital economy, but a leader within it.
