The EU Keeps Changing the Rules to Fine American Companies

By James Bighenti

The EU has been relying on American companies to provide cloud services that they have made impossible to build in Europe. Then, as a condition of market access, they mandated interoperability, portability, and switching mechanisms for cloud service providers. American companies complied and ceded their competitive advantages, but now two American companies who participate in a highly competitive marketplace have been designated “gatekeepers” under the Digital Markets Act (DMA). According to the EU, Amazon Web Services (AWS) and Microsoft Azure (AZ) have met the “criteria” for being considered “gatekeepers.”

The problem here is that AWS and AZ are not monopolies, nor have they participated in anticompetitive practices. Both companies have complied with every regulation to date; they complied with the EU Data Act, which compels firms to allow users to switch cloud providers without egress or penalty. On top of other regulations that these two companies have complied with, they have proved that their products are reliable and they compete against each other and other products such as Google Cloud. Despite proving themselves as reputable in the market by complying with regulations and providing excellent products, they are still considered gatekeepers.

The Digital Markets Act sets thresholds that you have to meet to be considered a “gatekeeper.” Article 3 of the DMA states that a company must have a significant impact on the internal market, which to them is an annual turnover of at least €7.5 billion or have a market cap of at least €75 billion. “Gatekeepers” provide a core platform service which is an important gateway for users and which enjoys an entrenched and durable position now and in the foreseeable future. Once a company has been designated as a “gatekeeper,” they have to comply with new regulations, including: interoperability with third-party services, portability of data, access to platform-generated data for business users, and no use of non-public business-user data to compete against users. AWS and AZ have already complied with portability and interoperability, showing that they already play by the EU’s rules.

According to the EU, you can follow the rules and succeed in a competitive marketplace and yet still be punished for it. The DMA is considered an antitrust and market competition regulation, yet AWS and AZ have done nothing wrong.; They already comply with many of the regulations in place. This EU legislation aims at preventing large tech companies from bullying smaller European startups that they have made difficult to get off the ground. By naming AWS and AZ as “gatekeepers,” the EU has just shown they just want to generate revenue from successful American companies fairly competing in a heavily regulated European market.