Boosting Europe's digital competitiveness requires EU regulators to carefully consider the unintended economic impact of the Digital Markets Act (DMA) on other sectors and avoid premature regulatory intervention in the growing generative AI landscape. These are the main findings of two independent studies revealed today.
Generative AI is identified as a dynamic, innovation-driven market shaped by customer demand in Europe. However, the DMA is causing significant economic harm—estimated at up to €114 billion annually—affecting parts of the economy beyond its intended scope.
The studies were introduced by their authors at the 'Reality Check: AI Competition Dynamics & the DMA’s Economic Cost to Europe' conference in Brussels, organized by the Computer & Communications Industry Association (CCIA Europe).
A new report focused on the DMA finds that despite its pro-competition goals, it is causing major economic losses across various EU sectors. Total turnover in these sectors has decreased by up to 0.64% per year since May 2023.
These impacts result from diminished personalization, reduced reach, higher transaction costs, and loss of valuable platform integrations due to changes required by EU regulators under the DMA. The most affected sectors include accommodation (up to €14 billion in annual losses) and retail (€4.4-59 billion per year).
As a review of the DMA approaches, these insights highlight the need for a critical evaluation to ensure that it genuinely supports growth, innovation, and competitiveness.
In contrast, a study on competitive dynamics in generative AI emphasizes its rapid evolution and strong potential. The authors conclude that this sector is dynamic across all levels of the value chain. The deployment layer holds significant untapped potential, attracting increasing capital due to high-value real-world AI applications.
Previously anticipated risks have not materialized according to this report, making early regulatory action unnecessary—and potentially harmful—to the generative AI sector.
To remain competitive, Europe must learn from past mistakes and support innovation in generative AI by resisting premature regulatory moves. Today's findings suggest that by restricting key platform features, the DMA has an opposite effect on many sectors.
Boniface de Champris from CCIA Europe stated: "Generative AI is thriving in Europe with dynamic and contestable markets at all levels of the value chain and significant untapped potential at application layer. This study shows that regulatory intervention is not warranted and could slow innovation."
Maria Teresa Stecher from CCIA Europe noted: "The DMA’s unintended side effects cost broader EU economy up to 114 billion euros annually – impacting sectors never targeted by Act. It’s time for serious rethink."