On 13 October, ACT | The App Association hosted a webinar on the impact of the Digital Markets Act (DMA) in Spain. The event brought together app developers, policymakers, and academics to discuss the realities of the Spanish tech ecosystem and develop solutions as a community of innovators. The panel was composed of:

  • Javier Domínguez Viera, Senior Advisor, Deputy Directorate-General for Better Regulation, Business Support and Competition at Directorate General for Economic Policy, Ministry of Economic Affairs and Digital Transformation
  • Fernando G. Guerrero, CEO and Founder, Nouss Intelligence
  • Joaquín López Vallés, Director, Advocacy Department at the Comisión Nacional de los Mercados y la Competencia (CNMC)

If you missed the event, read the recap, or watch the event recording below.

 

What is the impact of regulation on app developers in Spain, and how can we avoid unintended consequences in the DMA and other legislation?

Fernando G. Guerrero, CEO and founder of Nouss Intelligence, kicked off the webinar. Nouss has its headquarters in Alicante and specialises in building artificial intelligence (AI) systems that help other companies increase their productivity. Speaking from more than 40 years of industry experience, Mr Guerrero shared his views on the opportunities platforms currently offer in digital markets. He stressed that simply being present on large platforms granted his company access to international markets it would not otherwise have. Mr Guerrero hopes that one day, Nouss can become its own platform on which developers build solutions to complement his existing services.

For his company to grow, Mr Guerrero emphasised the need to establish basic digital rights for consumers and businesses users. These rights should then become the foundation of conceptual rules for platforms. At the same time, he cautioned against overly complex laws that may make it necessary to spend his limited financial and human resources on compliance instead of technical progress.  Both legal uncertainty and non-compliance costs could put his company out of business.

‘Every time I see a new law – coming from Spain or coming from Europe – honestly, I panic. Because for me, every new law represents an extra cost I need to add to my monthly cost […] the more complex the laws are, the less secure we feel’. – Fernando G. Guerrero

Javier Domínguez Viera, senior advisor in the Spanish Ministry of Economic Affairs and Digital Transformation, addressed some of the concerns raised by Mr Guerrero in his opening remarks. He said that while the Ministry supports the European Commission’s proposal for a DMA, there is still room for improvement. Notably, Mr Domínguez Viera emphasised the need for legal certainty, predictability, and clear procedures to ensure SME app developers have enough information to anticipate the impact of legislation on their businesses. He, therefore, stressed the importance of involving third parties in the regulatory dialogue process and setting clear, feasible, and balanced obligations.

‘When defining the obligations and when applying the regulatory dialogue, it’s important to be sure that third parties have the opportunity to raise their voice if they think that certain elements may be affected’. – Javier Domínguez Viera

Speaking in a personal capacity, Joaquín López Vallés, director of the advocacy department at Spain’s competition authority, the CNMC, highlighted the advantages of current competition law.  He argued that while the DMA has value, it should complement the existing efficiencies of competition law. He further explained that although the DMA and competition law may have similar goals, they have different approaches. Competition law, he emphasised, is based on a case-by-case, ex-post assessment that considers whether a company has abused a dominant position in the market. First, national competition authorities must determine if a company is dominant. Then they have to evaluate the positive and negative effects of its practices and consider objective justifications. Only after a competition authority concludes that a certain practice is harmful can it qualify the behaviour as an infringement under competition law.

In contrast, the DMA designates companies that satisfy certain thresholds as gatekeepers. Those gatekeepers then must comply with a list of obligations and prohibitions, without any case-by-case consideration of possible negative or positive effects. Mr López Vallés cautioned that the latter approach risks overenforcement, which may lead to unintended consequences. To be most effective, he argued, the DMA should demand a good diagnosis of the issues and targeted interventions. Such an analysis may require enhanced participation and coordination with national competition authorities.

‘There is an obvious risk of overenforcement with the DMA […]. If gatekeepers are defined too broadly or if the practices that are part of the obligations and prohibitions of the DMA are also very, very broad then we may risk prohibiting conduct that is, in net terms, efficient – or we may be hampering innovation’. – Joaquín López Vallés

What impact may the DMA have on smaller app developers?

Throughout the webinar, Mr Guerrero stressed the need for a safe, secure, and trusted digital ecosystem. Illustrating his point, he highlighted the potential threat of reputational damage to his company if a third-party service built upon his AI solutions is ineffective or unsafe. As a business owner, he feels the responsibility to ensure a secure digital environment for his customers. Further, Mr Guerrero described the strict procedures developers must follow to publish a mobile application on the largest app stores. Regarding the possibility of the DMA mandating sideloading and third-party applications, Mr Guerrero expressed concerns about the inherent risks of opening the app ecosystem without sufficient testing or safeguards.

‘Security is key for me because if someone is buying a service that is complementary to my services, I want to make sure that those extra services can be fully trusted and that they are not going to damage our clients’. – Fernando G. Guerrero

Mr Lopéz Vallés also spoke of the challenges the DMA could pose to smaller app developers, particularly when coupled with similar pieces of legislation. He recommended that regulators consider competition when drafting laws in related fields, such as privacy, to avoid setting unreasonable compliance costs.

‘If the cost of compliance for small companies is made very high, that may have an adverse impact on competition’. –Joaquín López Vallés

Although Mr Viera endorsed principles of the DMA, he noted that the DMA’s impact on the digital platform ecosystem once a specific provider complies with the full set of obligations is still unknown. For this reason, he stressed, there must be some degree of flexibility in the DMA. Both the regulatory dialogue process and delegated act procedure could help to achieve this flexibility. However, Mr Viera insisted on the need to properly balance the Commission’s power to use delegated acts to safeguard institutional balance, legal certainty and predictability in the practical implementation of the regulation.

‘If we reset the framework without knowing the limits at the end, the main parts that are going to be affected are the SMEs – that’s a scenario that we want to avoid’. – Javier Domínguez Viera

Ultimately, although all speakers endorsed the goals of the DMA, each also commented on the risk it may pose to Spanish app developers and entrepreneurs. The DMA should complement existing efficiencies, including ecosystem security and competition law, and avoid fragmenting either the internal market or legal certainty and associated compliance costs. With a strong evidence base, targeted application, and appropriate safeguards, the DMA may prove to be a valuable tool to address the new challenges of digital markets.

We thank our speakers for their participation and insightful interventions and look forward to the next stop on the App Makers Tour of Europe!