How the EU digital markets act will impact travel

Amid growing recognition of the power wielded by the Big Tech players, governments worldwide have pushed to enact new regulations and increase antitrust efforts. While the U.S. has targeted individual companies including Google, Amazon, Apple and Meta via antitrust litigation, the European Union (EU) has led efforts to enact new legislation aimed at shaping the current – and future – digital landscape.

The EU’s Digital Markets Act (DMA) is a broad regulation targeting large companies designated as “online gatekeepers” – and the legislation is already shaking things up. 

In addition to the six tech companies initially designated as gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft), in May 2024 the European Commission added Booking Holdings, namely Booking.com, as an additional gatekeeper, giving the OTA six months to comply. The DMA aims to promote competition and protect consumer rights – but critics argue the regulation could have unintended consequences, including stifled innovation and negative impacts on small and medium-sized enterprises (SMEs) and consumers.

While DMA enforcement is in its very early stages, changes made in response to the regulation are already disrupting the status quo for travel businesses, including some European hotels. This is a preview of Phocuswright's full report How the EU Digital Markets Act (DMA) Will Impact Travel.  

Inside the Digital Markets Act

The Digital Markets Act establishes criteria for identifying large digital platforms (i.e., gatekeepers) operating in the EU, focusing primarily on: 

• Size, based on annual revenue or market capitalization;
• Control of a core platform service used as a gateway for business users to access end consumers; 
• An entrenched and durable position

Companies can be designated as gatekeepers for one or more platform services across any of 10 categories: 

• Online intermediation services
• Online search engines
• Online social networking services
• Video-sharing platform services
• Number-independent interpersonal communication services (i.e., messaging apps)
• Operating systems
• Cloud computing services
• Advertising services
• Web browsers
• Virtual assistants

Companies designated as gatekeepers are subject to specific requirements and restrictions. For example, gatekeepers are required to: 

• Allow third parties to interoperate with the gatekeeper’s services
• Allow business users to access the data generated by using the platform
• Provide advertisers access to performance metrics and verification information
• Allow business users to promote their own offers and conclude contracts with their customers outside the gatekeeper’s platform
• Receive consent from users before combining or sharing user data between platform services; if user does not consent, provide a less personalized but equivalent alternative

Gatekeepers are prohibited from: 

• Leveraging the data of business users for competitive advantage when gatekeepers compete with them on their own platform
• Ranking the gatekeeper’s own products or services more favorably than those of third parties (i.e., self-preferencing)
• Requiring app developers to use the gatekeeper’s services, such as payment systems, in order to appear in app stores
• Tracking end users outside of the gatekeeper’s core platform for targeted advertising without consent

The gatekeepers

Initially, the European Commission designated six tech companies (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) as gatekeepers across 22 services, and these services were required to comply with DMA regulations beginning March 7, 2024. Subsequently, the Commission added Apple’s iPad OS on April 29, 2024 and Booking.com on May 13, 2024, with each having six months from the date of designation to comply. 

Since the initial March compliance deadline, the Commission has already opened non-compliance investigations into Alphabet, Apple and Meta, with more likely to come. If a company is found to be in violation of the DMA, it could be subject to fines of up to 10% of its global annual revenue, increasing to up to 20% for repeat offenses. 

While the ongoing investigations may mandate additional modifications, the initial gatekeepers have already enacted numerous changes. For example, ByteDance’s TikTok launched a Data Portability API for developers; Apple added over 600 new APIs, added distribution and payment options for developers, and made changes to iOS, Safari and the Apple App Store in the EU; Google has made changes to search results, launched consent banners for sharing data across Google services, and added search engine/browser choice screens, to name a few.

Impacts and implications

While it will be years before the real-life benefits and consequences of the DMA will be fully known, the structure of the law, identities of the gatekeepers and the changes made to date are open to analysis. The full report delves into the two categories:

• The Law of Unintended Consequences
• The Competitive Landscape

Anticipating winners and losers

The DMA is designed to curb anti-competitive practices and improve access to digital markets. The practices that gatekeepers are required and forbidden to do would, in theory, benefit gatekeepers’ business customers, including SMEs, and consumers. While both groups will certainly see some benefits, the long-term impact of the DMA is likely to be complicated.

Some key factors to consider, which are outlined fully in the full report:

• Gatekeepers will promote their competitive interests
• Gatekeepers may think locally, act globally
• The DMA’s impact could be amplified via copycat regulation
• Gatekeepers may scrap some tech in Europe altogether
• The impacts of the DMA may not match expectations

To better understand the complexity of how the DMA may play out, the full report takes a closer look at each of these:

• Rate parity
• Search

Stay tuned

As existing gatekeepers establish and refine their response to the Digital Markets Act, there are likely to be additional changes that impact travel companies, sometimes in unanticipated ways. As gatekeepers balance their own competitive interests against regulatory requirements, short-term disruptions are likely for travel suppliers, advertisers and end users.

In the longer term, however, gatekeepers like Google and Booking have a vested interest in maintaining strong relationships with business customers and in optimizing the user experience. 

Over time, advocacy from hotels and other stakeholders will likely forge a new equilibrium. During the next five years, we are likely to see some of the benefits of the DMA come to fruition, but the negative impacts will also become evident.

Despite the threat of regulation, new gatekeepers could emerge, and we may see additional regulations modeled after the DMA in other markets. Ultimately, it is innovation and new technology – not regulation – that has the greatest potential to disrupt the status quo.