Digital regulation gets go-ahead in Europe

The green light from European regulators for the Digital Markets Act (DMA) earlier this month is welcome news to many travel companies.

A number of Europe-based travel players, particularly metasearch companies, have been vocal for some time about unfair competition in the market, pointing the finger at Google for preferencing its own products and services.

The DMA sets out to ensure a level playing field for all sizes of companies and to tackle the might of the “digital gatekeepers.”

Back in late 2020, Margrethe Vestager, executive vice president of the European Commission for a Europe Fit for the Digital Age, said the DMA was about having the “right toolkit in place” to keep digital markets fair .

Around the same time a group of travel companies including Awaze, Booking.com, eDreams Odigeo and Expedia wrote to Vestager to ask the Commission to enforce a 2017 decision, and fine, on Google’s abuse of dominance .

Broadly speaking digital gatekeepers are large companies that are an access point for consumers and are able to use their market position and power in a way that impacts other markets.

The act has been in the works for a number of years, but now the European parliament has given it the go-ahead and it is expected to take effect next year.

While Google has been singled out in the past in the same breath as digital gatekeeper, so too have Airbnb and Booking.com .

Whether the regulation will have teeth to tackle the issues raised by travel companies remains to be seen.

Patrick Andrae, co-founder and CEO of HomeToGo , says old competition laws that have been used to fine companies have just ended up in protracted legal wranglings, while culprits continue to earn revenue.

“It’s questionable whether they are dealing with what the Union has told them to obey, and at the same time a lot of competing services are either smaller than they could have been or have disappeared. With the gatekeeper power often comes, naturally, financial power.

“My understanding is, and it’s obviously up to the authorities, that you have a strong possibility to look into the misbehavior, misuse or misconduct earlier and not retrospectively say it was wrong, because that doesn’t help the people affected.”

Andrae welcomes the go-ahead for the legislation and says that while HomeToGo is not afraid of competition, it has to be fair.

“It is good that there is a mechanism and the possibility in act to actually give younger companies, and innovative companies like ours, a fairer playground to play with the bigger companies that are controlling more of the market, such as the infrastructure, or like the DMA says - the gatekeeper companies,” he says.

“It’s a good sign that there is a mechanism being built that says there is certain legislation that if you are so mighty you fall under the gatekeeper definition, you could say you have a certain type of obligation that is now put into code, that you take care to not misuse this power.”

Digital fitness

Bosses at Trivago have also spoken out about the situation in the past and said the DMA will create new opportunities for metasearch .

Axel Hefer, CEO of Trivago, says “I am very pleased that the DMA has finally been passed. It is an important step towards making Europe fit again as a business location for more innovation and competition. I fully agree with Commissioner Breton: Enforcement of the rules is now key. It is imperative to ensure that the Commission has all necessary resources to crack down on Google’s self-preferencing practices.”

However, whether the act will have implications for the large travel companies also remains to be seen.

Glenn Fogel, president and chief executive of Booking Holdings, has said in the past that it would be wrong to view the company as a gatekeeper , because consumers in Europe have “multiple online and offline choices to book accommodations and accommodation providers have multiple online and offline channels for our customers.”

Reacting to news of the green light for the act, a Booking.com spokesperson says: “Booking.com is supportive of regulation that creates a level playing field. We are aware of the agreement that has been reached on the Digital Markets Act and are currently assessing its possible implications for our industry.”

As noted above, Google has been on the receiving end of fines from European regulators and individual countries as well as calls for more transparency in pricing and search results.

A Google spokesperson says: “The recent votes on the DSA [Digital Services Act] and the DMA are an important step in an 18-month European regulatory process and will have a significant impact. We appreciate having had the opportunity to engage with policymakers throughout this process. We welcome the goals of these laws to make the internet even more safe, innovative and accountable, while ensuring that European users, creators and businesses continue to benefit from the open web. As the laws are being implemented, the details will matter. We look forward to working with regulators to ensure the law works for everyone.”