The European Union’s Digital Markets Act (DMA) – intended to foster competition – is fundamentally flawed. While presented as a tool for leveling the playing field, it’s more likely to accelerate Europe’s decline in the global tech landscape. The DMA, along with the EU’s broader regulatory approach, reflects a persistent misunderstanding of how markets work, ultimately harming both European businesses and consumers.
The Illusion of Control
European regulators have increasingly attempted to preemptively control emerging technologies, a strategy that backfired even before it was fully implemented. Margrethe Vestager, former Competition Commissioner, warned three years ago about the need to anticipate future tech shifts like the metaverse and AI. Yet, history shows regulators are notoriously bad at predicting market outcomes: Meta briefly shut down Horizon Worlds shortly after her warning, proving the point.
Similar failures are evident in the EU AI Act, already outdated upon its enactment due to rapid technological advancements. This pattern highlights a core issue: premature regulation stifles innovation. The US Federal Trade Commission Chair, Andrew N. Ferguson, bluntly stated that “over-regulation…has diminished Europe’s ability to compete.” He noted that nearly every firm designated a “gatekeeper” under the DMA is American, a telling sign that the law isn’t curbing dominance but solidifying it.
The Misconception of Dominance
European regulators treat tech giants like Amazon as if they were 19th-century railroads, failing to recognize that size doesn’t automatically equate to market control. Even Microsoft, strategically positioned, hasn’t conquered key sectors like social media or large-scale LLMs. The DMA’s approach—regulating access and enforcing non-discrimination—mirrors failed telecom regulations from decades past.
The problem is Europe has conceded the underlying digital infrastructure—today’s platforms—to US firms. This means European challengers are forced to compete on the platform, not for the market. The battle is unwinnable; true competition requires owning the market, not just occupying space within it.
The Soviet Echo
The EU’s regulatory philosophy is fundamentally broken. Abolishing the DMA alone won’t fix it. What’s needed is radical deregulation, a dismantling of EU regulations, and forceful enforcement of internal market rules. To compete in the AI era, Europe must dominate all layers of the tech stack, as Nvidia CEO Jensen Huang aptly describes.
The situation echoes the Soviet Union, where relative success within a failing system ultimately amounted to failure when compared to the outside world. The law of supply and demand is immutable; suppressing it only increases costs for citizens and businesses. The DMA isn’t regulating competition; it’s regulating failure.
The EU needs institutional change so drastic that even Javier Milei would be impressed. But given the EU’s rigid structure, such change appears impossible.
Ultimately, Europe’s tech policy is a self-inflicted wound. The DMA and similar regulations are not a solution; they are a symptom of a deeper, systemic problem.
