Digital Platforms Regulation: An Innovation-centric View of the EU’s Digital Markets Act

Key Points:
We conceptualise innovation as new interactions being created by the digital platform, in contrast to coordination which facilitates existing interactions or market transactions.

We apply this framework to the DMA to assess two of the most contentious practices: self-preferencing and data-sharing.

We show that these practices differ hugely in the extent to which they replace existing interactions (little to negative innovation effect), sustain existing interactions (moderate, positive innovation effect), or trigger new interactions (large, positive innovation spillovers).

We thus derive that the business model agnostic approach to digital platforms taken in the DMA risks treating practices that increase the value created by an interaction equally to those that simply shift the distribution of value.