ACT | The App Association Reacts to the European Commission's Digital Markets Act and Digital Services Act

BRUSSELS, Dec. 15, 2020 /PRNewswire/ -- Today, the European Commission (EC) released its Digital Markets Act (DMA) and the Digital Services Act (DSA) aimed at guiding the future of digital sovereignty in the European Union (EU) by addressing topics such as content regulation, competition, and market practices. Both proposals outline several reforms intended to address the market power of global tech giants and the perceived harms associated with platforms (such as social media, search, or retail). Taken together, the proposals could certainly impact the markets in which App Association members compete.

"We appreciate the EC's concern for European small and medium-sized enterprises (SMEs) competing with larger global players," said Mike Sax, chairperson and founder of ACT | The App Association. "However, the DMA proposal will only level the playing field for gatekeepers but not for small companies. App makers will suffer from the ripple effects this legislation will have on the whole ecosystem, making it more difficult to reach consumers and compete against big brands."

Among the recommendation in the DMA that could negatively impact App Association members are:

• The combination of ex-ante rules and the market investigation tool could duplicate existing EU competition law provisions. The app economy is thriving and helping thousands of EU companies find success, even during a pandemic. The Commission's commitment to preserving competition is commendable but responding to potential problems without evidence of actual harm is the wrong approach.
• The creation of a list of prohibited practices (blacklist) and obligations (whitelist) for large online platforms is concerning. The white-, gray-, and blacklists only address a snapshot of the current economy. They will be outdated a few months from now. For example, forcing multiple app stores on devices would only fragment the market and increase costs, especially for smaller app makers with limited resources. We prefer a model like the core principles in the E-Commerce Directive, defining what's truly important and what should guide competition policy moving forward.
• Rather than taking an ex-ante approach that tries to anticipate problems, the App Association believes the best way to safeguard competition is to continuously look for evidence of actual harm and put mechanisms in place that can address it with swift remedies.

Regarding the DSA, the App Association welcomes the EC's proposal, and a number of the suggested remedies will benefit SMEs in the app economy including:

• Expanding the Single Market for Digital Services and clarifying the responsibilities of online intermediaries.
• Maintaining the core principles of the E-Commerce Directive such as limited liability, prohibition on general monitoring, and country of origin. The core principles of the E-Commerce Directive enabled the remarkable growth of European digital services and still fit the intended purpose today.

As this proposal passes through the legislative process, we encourage policymakers to continue to ensure that the new obligations minimize unintended consequences that would disadvantage smaller companies.

"We look forward to working with legislators towards the creation of a flexible, adaptive, and proportionate framework fit for the emerging challenges of the digital world," said Sax. "It is imperative we continue to create new opportunities for European app developers and other digital SMEs."

About the App Association: ACT | The App Association represents more than 5,000 app makers and connected device companies in the mobile economy. Organization members leverage the connectivity of smart devices to create innovative solutions that make our lives better. ACT | The App Association is the leading industry resource on market strategy, regulated industries, privacy, and security.