Markets, where there are powerful monopolies capable of pushing out the competition and generally setting their own rules, are long known to hamper innovation and restrict consumer freedom.
That's why there are strict regulations in place in the banking, energy, and telecommunications sectors.
So why do the big players in the digital space seen to have free reign?
Today on the Digital Distillery we are looking at something called The Digital Markets act which has just been passed in Europe, and aims to finally curb the gatekeepers of the digital space.
This episode was inspired by the original blog posts from Jean-Philippe Caste which you can find here for further reading (adapted from the original French):
Other articles references you can check out here:
https://www.statista.com/topics/4213/google-apple-facebook-amazon-and-microsoft-gafam/#dossierKeyfigures
https://www.pentalog.com/blog/strategy/gdpr-facebook-affair/
https://politheor.net/how-gafa-can-bully-banks/
This episode is brought to you as always by The Digital Distillery.
If you would like to get in touch with us you can head to our website or email podcast@the-digital-distillery.com
You can follow us on:
Facebook, Twitter, Instagram & LinkedIn
Written, Produced & Engineered by Phil McDowell
Executive Producer: Nadia Koski
Project Leads: Dennis Kirschner
Markets, where there are powerful monopolies capable of pushing out the competition and generally setting their own rules, are long known to hamper innovation and restrict consumer freedom.
That's why there are strict regulations in place in the banking, energy, and telecommunications sectors.
So why do the big players in the digital space seen to have free reign?
Today on the Digital Distillery we are looking at something called The Digital Markets act which has just been passed in Europe, and aims to finally curb the gatekeepers of the digital space.
This episode was inspired by the original blog posts from Jean-Philippe Caste which you can find here for further reading (adapted from the original French):
Other articles references you can check out here:
https://www.statista.com/topics/4213/google-apple-facebook-amazon-and-microsoft-gafam/#dossierKeyfigures
https://www.pentalog.com/blog/strategy/gdpr-facebook-affair/
https://politheor.net/how-gafa-can-bully-banks/
This episode is brought to you as always by The Digital Distillery.
If you would like to get in touch with us you can head to our website or email podcast@the-digital-distillery.com
You can follow us on:
Facebook, Twitter, Instagram & LinkedIn
Written, Produced & Engineered by Phil McDowell
Executive Producer: Nadia Koski
Project Leads: Dennis Kirschner
Since the rise of the internet, a small group of corporations has predictably followed suit in their rise to power and dominance in the new world. They were and are sometimes still known as the GAFA. A term coined in 2012 with a somewhat pejorative undertone in a French newspaper. That would be Google, Apple, Facebook, and Amazon. Now it’s more like GAMMA; google Apple meta Microsoft and Amazon. Whatever the acronym, they are challenging the way we see privacy, freedom of speech, fair markets, and even personal identity.
As it stands they have a combined market value of nearly 7 trillion US dollars. 4 years ago it was about 1.7 trillion. So as you can see they gained a lot of power in a relatively short time and since their establishment in the new order, have been a key driving force of an unprecedented amount of change in our lives. And a whole lot faster than regulation can keep up.
The main general concerns surrounding GAMMA include our privacy, how they use our data for profit, their impact on the environment as well as their impact on social and political structures. They arguably hold more power on a global scale than some governments, and in the past have even come under scrutiny for bullying banks.
But the specific concern surrounding the digital marketing industry that we are discussing in today’s episode is that of market fairness. When a handful of companies control such a large chunk of a market like this, they can do a lot of things that squeeze out healthy competition, having a potential negative impact on those businesses, their employees and all of the consumers in between.
Google's ruthless and incessant acquisition of its competitors, Amazon’s legendary mistreatment of workers, Meta (formerly facebooks)’s multiple security breaches and bold-faced sale of its users' personal data, and Apple’s downright predatory manufacturing policies. And these are just a few examples.
In the past there have been a few regulatory endeavors that attempt to reign in some of this unbridled power but, nothing has really made a significant impact. Until recently that is, at least potentially.
Different countries have taken different approaches to these issues.
In the US there has been talk about how it might be possible to ‘break-up’ the larger companies into smaller fairer chunks, and there is precedence for this, although not many cases and not always successfully. Apart from standard oil in 1911 and AT&T in 82, as well as a failed attempt at Microsoft in the 90’s, America’s standard response in the face of monopolies has been staunch no-action approach.
China has handled it by flat-out banning the big American companies and encouraging their own internal equivalents to flourish which, actually is really effective, if only uniquely possible to China.
In Europe, traditionally the approach has been to engage and contain by imposing heavy fines when one of these companies pushes too far or does something questionable, but ultimately like the other western approaches, it has proven ineffective.
In general, the fines are just considered ‘the cost of doing business’ and it’s no real skin off their nose. The equivalent of a speeding ticket to the deep pockets of the biggest offenders.
Since 2017 for example, the European authorities have demanded more than eight billion euros in penalties from Google alone. Despite appeals, Google has had to pay the fines in part with no real hindrance to its growth, with an annual turnover increase of 37% in 2021.
The new approach in Europe started in 2015 with the introduction of the General Data Protection Regulation which established a legal platform for defining regulations and imposing sanctions, thus paving the way for the newly introduced Digital Markets Act.
Having been in the works for a while now, November 1st 2022 saw the European Parliament pass a new law with an overwhelming majority; The Digital Markets Act.
The DMA from here on out, together with the Digital Services act, stands as one of the centerpieces of the greater European Digital Strategy and will come into full effect as of the beginning of May next year.
And in theory, this law radically changes the way the GAMMA Gatekeepers operate.
It should provide a fairer business environment for competitors and more security for those companies that depend on the larger Gatekeepers’ services. Innovators and start-ups will have new opportunities to compete and innovate in the digital space. And consumers will have more and theoretically better services to choose from.
What makes the European Commission’s approach different is that antitrust enforcement, anti-trust being the regulation of the concentration of economic power, is moving up a gear.
In order to counter the large companies' ability to simply shrug off a set fine for not complying with regulations, the DMA fine structure will be percentage based, between 6 and 20, and that means no matter how big and profitable you are, it’s going to hurt and should give pause for thought over the way that they have been operating.
In order to avoid these fines, companies will have to allow third parties to inter-operate with their own services. They will have to allow their business users to access the data that they generate when operating within the gatekeeper.. And they will have to allow companies to advertise fairly on their platforms including carrying out their own independent verifications of those ads.
Gatekeepers like GAMMA will no longer be able to treat their products and services with priority or track end-users outside of their own core platform for unconsented targeted advertising.
It’s no surprise to say that they, aren’t so thrilled with this development and have, predictably, announced vehement opposition to these laws.
They argue that the new regulations are likely to hamper innovation and restrict consumer freedom, ironically, as is often the case with bully’s, claiming the same victim status of those that they muscle around.
Whatever the outcome of the inevitable legal battles, this is a significant regulatory turning point and a logical one.
After all, similar regulations already exist in the energy, banking, and telecommunications sectors so why should the digital markets be an exception?
Freedom to innovate and consumer choice just don’t truly exist in a market dominated by a handful of giants that have become omnipotent. Every consumer, every company, and every citizen in Europe at least, will benefit from the more open and fair system that is being crafted. And its success will be closely monitored globally by other countries and markets also in need of a change to the status quo of the big corporations.
And that’s all we have for you today for this particular special episode of The Digital Distillery Podcast but there is one more thing I would like to mention.
My colleague Ara Almada who happens to be a sustainable development expert, and I have been hard at work behind the scenes putting together the first proper episode for our new show. It's called Green About Media and, keeping on trend, it's all about ‘distilling’ the huge amount of information and mis-information surrounding sustainability in the corporate and specifically digital sector..
This is a topic that is really personally important to me, as an individual,, as a parent, and just as a permanent resident here on this blue-green ball we call home. I wanted to understand more about all the things , all the issues, and potential solutions that are currently happening in this space and so with Ara’s help, we are bringing this knowledge together, summing it up and sharing it with you all.
The show is called Green About Media and you can find it wherever you found the digital distillery podcast. I would love for you to go and check it out, rate and subscribe if you like it, and tell me what you think.
You can contact me on one the usual channels, the digital distillery website, socials, or podcast@the-digital-distillery.com, I look forward to hearing from you.
To close out the episode I have put together a little clip from Green About Media so you can get an idea of what it's going to be like. Thanks for joining me and i’ll catch you on the next one.
Thank you for joining us for another episode of the digital distillery and I hope you enjoyed that clip for Green About Media and if you want to hear more you should go check it out. There will be a new episode releasing Thursday every 2 weeks.
As for the next episode of the Digital Distillery podcast we will be in Austria with the final speaker for the Vienna event who personally ran the marketing campaign for one of the most successful political campaigns in modern german history. Bringing more than 50 years of marketing experience and insight to the stage Thomas Koch is going to tell us about the Secret to a winning media strategy.