Will webshops suffer from a law aimed at tech giants?

Europe is working on a new Digital Markets Act, which should curb the dominance of large technology giants such as Amazon, Google and Facebook (Meta). However, other e-commerce players, such as Zalando and Bol.com, fear that they might bear the brunt.
 

Online gatekeepers

The first steps towards a ‘Digital Markets Act’ have been taken, which should safeguard the free online market and limit the power of big technology players. In December last year, the European Commission submitted the bill, and the European Parliament has now approved it. 

The specifics of the law are still subject to further negotiation, but what is certain is that the world’s biggest technology players, such as Amazon, Google, Facebook and Alibaba, will be assigned a role as ‘gatekeepers’. They will be responsible for easy and free access to online consumption, including that of their competitors.

This means, for example, that Amazon or Alibaba must also allow sellers on their marketplace to sell on other platforms. Google Shopping must not favour its own store results over other online stores or price comparators. The legislation is also designed to make takeovers more difficult so that the tech giants do not simply continue to expand their dominant position.

European web giants also in danger

Remarkably, the proposal has also been made more restricting by the members of parliament. Initially, the stringent rules would apply to companies with a minimum turnover of 8 billion euros and a market capitalisation of 80 billion euros. Following the Commission’s vote this week, the lower limit is now 6.5 billion euros in turnover and 65 billion euros in market capitalisation. Also, companies that have over 45 million active end users will be subject to the legislation.

Initially, the European technology and e-commerce industry supported the new legislation, but now they fear for their own futures. They, too, may now be subject to it. The e-commerce companies of the European Tech Alliance, including Booking, Bol.com and Zalando, call the stricter conditions an “obstacle to the growth of European e-commerce platforms”, according to Dutch newspaper FD. Bol.com, in particular, is worried as the marketplace will go public next year. Ahold Delhaize suddenly fears that the law will hinder the growth of “innovative European players”.

The European Tech Alliance argues for a distinction between social media networks and e-commerce companies. For the latter, the number of active users should not play a role, only the number of buying customers, they argue. Further negotiations on the bill will occur in the coming weeks; the final Digital Markets Act should not take effect until 2023.