Regulating Big Tech: Lessons from Europe's Digital Markets Act for India

Prof. Alberto Heimler is a Retired Professor of Economic Regulation, National School of Government, Rome

Over the past decade, a handful of digital platforms have come to play an extraordinary role in our economic and social lives. Google shapes how we search for information, Apple controls major mobile ecosystems, Amazon has transformed retail, and Meta’s platforms have become essential tools of communication for billions of people.

Their success has brought enormous benefits. Digital platforms have reduced transaction costs, facilitated innovation, and created entirely new markets. At the same time, their growing economic power has raised concerns among policymakers worldwide. Can competition survive in markets dominated by a few digital gatekeepers? Are smaller businesses treated fairly when they depend on large platforms to reach customers? And how can regulation encourage innovation without stifling it? Europe has attempted to answer these questions through the Digital Markets Act (DMA), one of the most ambitious efforts anywhere in the world to regulate Big Tech.

India is today one of the world’s largest and fastest-growing digital economies. As policymakers debate whether special rules are needed for large digital platforms, the European Union’s regulation offers valuable lessons — not only on the benefits it provides, but also on its potential risks.

The European Experience

The DMA, adopted in 2022 and applicable from May 2023, represents a major shift in regulatory philosophy. Traditionally, competition authorities intervene only after anti-competitive behaviour has been identified and investigated. Such investigations are often lengthy and complex, particularly in digital markets where technology evolves rapidly. The European Union concluded that waiting for antitrust cases to run their course was no longer sufficient, and introduced an ex ante framework imposing obligations on large digital platforms before harmful conduct occurs.

The DMA identifies certain companies as “gatekeepers” where they play a particularly important role in connecting businesses and consumers and possess durable market power — firms operating search engines, app stores, social networks, operating systems, online marketplaces and cloud services. Once designated, they are subject to numerous obligations: to allow users to uninstall pre-installed applications, permit interoperability with competing services, facilitate data portability, avoid self-preferencing their own products, and refrain from combining personal data across services without user consent. The underlying objective is clear: to make digital markets more contestable and fair.

Why the DMA Matters Beyond Scope

Although the DMA is a European regulation, its significance extends far beyond the Union. India, like many other countries, faces similar challenges: large platforms increasingly serve as essential gateways, and millions of Indian firms rely on online marketplaces, app stores and digital advertising to reach customers. The European experience is therefore instructive. First, the DMA recognises that digital markets possess characteristics that distinguish them from traditional industries — strong network effects, economies of scale and the importance of data may entrench certain platforms very rapidly. Second, it highlights the difficulty of relying exclusively on traditional competition law, since antitrust investigations often take many years, by which time market structures may already have changed irreversibly. Both concerns are highly relevant in India, where digital markets are expanding at remarkable speed.

The Risks of Overregulation

At the same time, Europe’s approach raises important questions. Many DMA obligations are derived from previous antitrust cases; yet under competition law, practices are normally assessed case by case, taking account of their actual effects and possible efficiency justifications. The DMA instead applies broad obligations automatically to all designated gatekeepers, and this rigidity may create problems. Digital markets are characterised by constant innovation and considerable uncertainty. Practices that appear exclusionary in one context may generate significant efficiencies in another: self-preferencing, bundling or restrictions on interoperability may sometimes benefit consumers by improving quality, security or innovation incentives. A central concern is that excessive regulation could weaken incentives to innovate — large profits are not necessarily evidence of market failure and are often precisely what encourage firms to invest in risky, costly innovation. The economic objective of competition policy is not to eliminate market power entirely or to achieve perfect competition, but to prevent firms from artificially creating, maintaining or extending market power through anti-competitive conduct. That distinction is crucial.

The Challenge of Contestability

One principal objective of the DMA is to increase “contestability.” In economic theory, a perfectly contestable market is one in which entry and exit barriers are so low that even a monopolist behaves competitively because of the constant threat of entry. As a theoretical benchmark this is useful; as a practical policy objective it can be problematic. No modern economy seeks to eliminate all monopoly profit — some degree of market power is often necessary to reward innovation and encourage investment — and an excessive emphasis on contestability could unintentionally reduce incentives for technological progress. The challenge is therefore to strike the right balance: promoting competition without undermining the incentives that make innovation possible.

What Can India Learn?

For India, the European experience offers both inspiration and caution. India’s digital economy is growing rapidly and will increasingly confront issues similar to Europe’s. Policymakers may reasonably conclude that traditional tools are insufficient in certain circumstances and that additional instruments are needed. Any future framework, however, should avoid excessive rigidity: a one-size-fits-all approach may prohibit conduct that is in fact beneficial, and regulation should remain flexible enough to distinguish genuinely anti-competitive practices from strategies that enhance efficiency. Particular attention should be paid to protecting smaller firms that depend heavily on platforms and may be vulnerable to opportunistic conduct; at the same time, regulators should avoid shielding large established competitors merely because they face stronger competition from platforms.

India also has an antitrust option that Europe did not fully explore before adopting the DMA: strengthening the Competition Commission of India’s existing enforcement powers rather than layering a new ex ante regime on top of them. The debate over India’s own Digital Competition Bill has already exposed this tension. Momentum behind the Bill slowed through 2025, while parliamentary reviewers concluded that the CCI’s capacity, resources and technical expertise — rather than any absence of legal tools — remain the binding constraint on effective digital-market oversight. If that diagnosis is correct, the priority may be institutional rather than legislative: building the CCI’s technical capacity and procedural speed, rather than adding a parallel ex ante framework whose obligations, as the European experience shows, are not easily calibrated to fast-changing digital markets.

Conclusion

The Digital Markets Act represents one of the boldest regulatory experiments of our time, and whether it ultimately succeeds remains uncertain. Its importance lies not only in its direct effects on European markets but in the global debate it has triggered about how societies should govern digital platforms. For countries such as India, it provides an invaluable laboratory, demonstrating both the necessity of adapting competition policy to the digital age and the dangers of excessive intervention. The future of digital regulation will depend on finding a delicate equilibrium: ensuring that markets remain open and competitive while preserving the incentives that drive innovation and growth.

The early evidence offers some reassurance. In its first review of the DMA, published in 2026,¹ the European Commission concluded that the regulation has already generated positive effects — greater consumer choice, increased opportunities for app developers, improved interoperability and easier switching between services. These developments are encouraging, though it remains too early to judge whether the short-term gains will be accompanied by unintended long-term consequences for investment and innovation. For every jurisdiction, India included, strengthening the effectiveness and speed of antitrust enforcement may ultimately prove the preferable path. Timely competition enforcement remains the best alternative to extensive ex ante regulation, allowing authorities to intervene against genuinely anti-competitive conduct while preserving flexibility and avoiding unnecessary constraints on innovation.

NOTES

1.     European Commission, “Review highlights Digital Markets Act remains fit for purpose and has positive impact,” press release, 28 April 2026.