The Digital Markets Act’s Innovation Paradox: Towards a Digital Magna Carta and Leviathan?

Abstract

The Digital Markets Act (DMA) represents the culmination of over a decade of debate and litigation on how to deal with the impact of the largest technology companies on the European economy. The DMA explicitly seeks to promote fairness and contestability. But it is also undeniable a key motivation behind the regulation was to promote competition and innovation in digital markets. This article aspired to partially address a simple, but complex question: Will the DMA promote innovation? It is argued that the DMA is concerned with the promotion of specific forms of competition innovation, with an emphasis on the structural redistribution of economic rents to achieve its aims. The article posits that the predominant forms of innovation competition promoted in the regulation both exemplify the DMA’s genius as well as its principal failing. By prioritising its pursuit of structural rent distribution, the DMA fails to acknowledge the idiosyncrasies of individual digital markets, instead favouring particular forms of innovation competition. As a result, the regulation is at risk of becoming a regulatory Leviathan: an overbearing set of rules whose objective is to impose or foster particular forms of competitive pressure in the digital sector, regardless of whether such competition is effective.