Newsletter
As the European Union’s Digital Markets Act looms, U.S. lawmakers believe the legislation unfairly targets U.S. companies. In a letter sent to U.S. President Joe Biden, 21 members of the House of Representatives asked the president to look into whether the law will be enforced fairly. The lawmakers pointed out that not a single company based in the EU was identified as a “gatekeeper” under the DMA.
By comparison, five U.S. companies were given gatekeeper status by the EU. These were Apple, Google, Meta, Amazon, and Microsoft. Similarly, only one company based in China was deemed a gatekeeper under the new law.
“Securing our leadership in this sector is imperative for our economy and American workers,” the letter, which was seen by Reuters, said. “The designation of leading U.S. companies as ‘gatekeepers’ threatens to upend the U.S. economy, diminish our global leadership in the digital sphere, and jeopardize the security of consumers.”
Are U.S. companies being singled out?
One might argue that there aren’t any tech companies based in the E.U. as giant as the five U.S. companies listed above. However, that doesn’t account for why more Chinese tech companies weren’t included under the DMA. For example, the owner of TikTok, ByteDance, was the only China-based company called a gatekeeper under the DMA. The U.S. lawmakers pointed out Alibaba, Huawei, and Tencent as Chinese corporations that may have warranted a gatekeeper status.
“The EU inexplicably failed to designate any European retailers, content-sharing platforms, payment firms, and telcos,” according to the letter.
The U.S. and the E.U. generally have a working relationship, but this dispute could upend that. As Reuters notes, the U.S. warned that using the DMA to target U.S. companies could have a negative effect on its relationship with the E.U.
“Our strong relationship with our European allies remains essential,” the letter states. “However, the recent decisions by EU authorities pose serious potential damage to America’s competitiveness and security interests.”
What does the “gatekeeper” designation mean?
Under the DMA, the E.U. has the authority to designate companies as “gatekeepers.” Essentially, these companies control access to an essential service. However, the more important term to know is “core platform service.” Core platform services are those that serve as an important conduit between E.U. businesses and consumers. Companies are required to make that service cross-platform in the E.U., if their service is determined to be a core platform service.
It’s easy to see why big tech companies would be against that concept. Exclusive products and services are essential to building competitive platforms. Plus, it could take extra time and effort to develop cross-platform versions of big services.
However, it’s unclear what, if any, changes could come as a result of this letter.