The EU Digital Markets Act and what it means for business [Q&A]

The Digital Markets Act (DMA) is aimed at ensuring a higher degree of competition in European digital markets. It seeks to prevent big companies from abusing their market power and allow new players to enter the market.

We spoke to Chris Hewish, chief strategy officer at video games commerce company Xsolla, to discuss the implications the DMA has on game developers and publishers, particularly in the context of digital distribution platforms, app stores, and online marketplaces.

BN: What is the EU's Digital Markets Act?

CH: The European Union's Digital Markets Act (DMA) is legislation aimed at creating fair competition and fostering innovation in the digital market. It targets large online platforms -- such as Apple, Google, and Meta -- that act as 'gatekeepers' because they meet the criteria of dominating the market due to their strong economic and intermediation position.

With the introduction of the Digital Markets Act, the European Union aims to address concerns regarding unfair practices, lack of competition, and the overwhelming dominance of the current tech giants in the digital markets. As part of a larger effort to reshape the digital markets, the Digital Markets Act will help regulate and ensure that gatekeepers operate in the best interests of consumers and businesses.

BN: How will the digital landscape evolve in response to the Digital Markets Act?

CH: The Digital Markets Act's guidelines drive a narrative that will change the digital landscape as we know it. The gatekeepers must follow principles in their daily operations so that smaller players can compete in the digital markets ecosystem. These principles are laid out simply in a set of 'dos' and 'don'ts' that will help to create a level playing field where everyone can compete equally.

The 'dos' include allowing third parties to inter-operate with the gatekeeper’s services and allowing business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform. The 'don'ts' stop gatekeepers from preventing consumers from linking up to businesses outside their platforms and treating services and products offered by the gatekeeper more favorably than similar services or products offered by third parties.

To ensure that the rules are relevant to the fast pace of digital markets, the European Commission will conduct regular market investigations to qualify companies as gatekeepers, update the provisions for gatekeepers when appropriate, and design remedies to tackle systematic infringement of the Digital Markets Act rules.

With these restrictions in place, the digital landscape will evolve in response to the Digital Markets Act so that the shackles of unfair practices and undue advantage will no longer apply.

BN: What opportunities will the DMA present for game developers and publishers?

CH: For game developers and publishers, introducing the European Union’s Digital Markets Act means they can now benefit from the digital markets ecosystem as they'll no longer have to comply with unfair conditions. With the Digital Markets Act guidelines set out, there are new opportunities for game developers and publishers to benefit from the digital markets.

For instance, gatekeepers must now allow sideloading of apps on their platforms -- like the Apple store or Google Play -- this opens many opportunities for game developers and publishers. This means they can now host their apps on their websites, giving consumers direct access to their products and services without a middleman. The benefit is that game developers and publishers will no longer be subjected to paying a significant 27 percent commission fee to the app stores. They can now bask in retaining a greater share of their earnings and reinvest it into their craft.

In addition, they also have the advantage of creating their own web shops within the gatekeeper’s app stores. As a result, when users browse through these stores looking for games, they’ll have the option to view titles available exclusively through third-party stores. For developers and publishers, this opens a door of opportunities because they can now build relationships with consumers directly and showcase their portfolio of games and services where they couldn't before.

BN: The DMA promotes market access for smaller players. How might this provision impact the ability of game developers to explore alternative monetization outside of traditional app stores?

CH: With reduced dependence on the gatekeepers' platforms, game developers may have the opportunity to negotiate better terms, innovate in monetization models, and diversify their revenue streams. Due to the guidelines set out by the Digital Markets Act, the increased competition could result in new distribution channels that offer fairer revenue-sharing models, which would encourage game developers to experiment with subscriptions, direct sales, or other monetization strategies.

The Digital Markets Act's focus on fairness and transparency could lead to platforms offering better terms, encouraging game developers to explore alternative and creative ways to increase their revenue streams. Ultimately, the DMA’s provisions have the potential to create a better ecosystem for the digital market, which would be advantageous to both developers and consumers with more diverse and innovative gaming opportunities.

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