The Framework

The European Union’s Digital Markets Act (DMA) designates companies as “gatekeepers” if they operate in at least three EU member states and have either €7.5 billion-plus in annual turnover or a market capitalization greater than €75 billion, while serving more than 45 million monthly end users and at least 10,000 business users. Once designated, a gatekeeper must comply with a set of per se rules that restrict practices such as self-preferencing, combining user data across different services without explicit consent, or bundling platform offerings. Noncompliant companies face substantial fines of up to 10 percent of their worldwide turnover—20 percent for repeated violations—making adherence to these mandates both urgent and costly.[1]

Implications for U.S. Technology Companies

Virtually all of the firms meeting these criteria are American companies with a large foothold in Europe’s digital ecosystem, including Alphabet (Google), Amazon, Apple, Meta, and Microsoft. Their critical role in search, social networking, operating systems, and online commerce means they must devote extensive resources toward redesigning platform features to avoid running afoul of DMA provisions. Because the rules classify certain modes of integration and data use as automatically anticompetitive, U.S. platforms lose flexibility to introduce new features, share user information across services, or seamlessly link products in ways that enhance consumer value. This, in turn, redirects top engineering and business talent from product innovation to legal compliance, decreasing these companies’ global agility and weakening their potential to drive future technological breakthroughs.

How China Benefits

Even though ByteDance (TikTok) is also listed among the gatekeepers, the sheer market share and usage of U.S. platforms ensures that America’s Big Tech companies bear the heaviest burdens under the DMA. As a result, Chinese players may find it easier to scale up in European markets, because U.S. firms will be hampered by rigorous oversight, intrusive data rules, and severe financial penalties for alleged noncompliance. These obligations pressure American platforms to spend large sums on audits, reporting, and compliance squads, effectively diverting capital and talent from inventive pursuits. By contrast, Chinese platforms—often supported by substantial state backing—can exploit this environment to increase investment in Europe, capture a larger user base, and advance their services abroad at the expense of America’s leading digital companies.

Endnotes