Big Tech’s grip on the digital economy is prompting a global policy rethink, and Europe is leading the charge.
A new article published in Academy of Management Perspectives, titled "Is Competition Policy Fit for the Digital Economy? A European Perspective," outlines how the European Union is redefining antitrust rules to better confront the rise of platform-based firms like Google, Apple, Meta, and Amazon. The piece, co-authored by the Ivey Business School’s Klaus Meyer, Saul Estrin of the London School of Economics, and Tobias Kretschmer of LMU Munich presents not just a critique of existing competition law, but a roadmap for what modern enforcement might look like.
“At early stages of the digital economy, new business models often flew ‘under the radar’ of established antitrust regulation,” Meyer explained. “Now regulators have begun to understand these new business models better and have become increasingly able to identify potential market power abuses.”
Unlike traditional firms, digital platform giants operate in complex ecosystems. They don’t just compete, they orchestrate. Through app stores, advertising platforms, payment systems, and marketplaces, they set the terms for entire digital sectors. This shift in market dynamics, where platform owners often compete with the same businesses they enable, has stretched the limits of conventional antitrust enforcement.
Digital firms now operate as ecosystems, not just standalone businesses. Competition is no longer just between similar services, but between entire ecosystems that define their own rules, interfaces, and user relationships.
In consequence, Meyer said, “Many digital markets take a winner-takes-most form, where the largest player can leverage economies of scale and scope, as well as network externalities and access to user data, to entrench its dominant position.”
A bold European response
Beyond applying established rules, the European Union (EU) has opted for a structural overhaul. The most visible example is the Digital Markets Act (DMA), enacted in 2024. The DMA formally designates dominant digital firms as “gatekeepers”, or entities that control access to key platform services. These companies are now held to strict rules around data use, interoperability, self-preferencing, and mergers.
Unlike in other jurisdictions, gatekeepers must proactively demonstrate compliance. The burden of proof has shifted: rather than regulators having to prove consumer harm, dominant firms must show they are not abusing their power.
That’s a marked departure from the reactive, case-by-case approach common elsewhere in the world.
“Contemporary policy discourse goes further,” Meyer said, “considering the business models and governance architecture of digital firms, the transferability of personal data, and the interoperability of systems and standards.”
In addition to the DMA, the paper outlines landmark cases brought by the EU Commission, many resulting in multi-billion-euro fines. Google, for instance, was penalized for giving preferential treatment to its own shopping and advertising services. Apple was forced to open up its payment infrastructure. Amazon and Meta have faced scrutiny for how they use data from third-party sellers and advertisers to prioritize their own products.
These decisions apply well-established principles of economics to the digital playing field by creating conditions that aim to create fairer competition and greater consumer choice.
Mergers under the microscope
The research also explores how Europe is rethinking mergers and acquisitions (M&As) in digital markets.
Traditional antitrust reviews tend to focus on price impacts in clearly defined markets. But digital platforms blur those lines. When dominant players acquire smaller tech firms, the effects may not show up immediately, but can significantly reduce competition over time.
In many cases, the concern isn’t just about consolidation within a single industry, but about vertical foreclosure, meaning the usage of dominance of one market (like a platform or an app store) to dominate others (like streaming, health tech, or payments). This type of power is harder to quantify, but central to the EU’s view of competition.
“Company strategy must understand the recent evolution [of competition policy],” Meyer said, “especially for strategic market behavior, inter-firm rivalries, and potential M&As.”
The new rules of competition
What is emerging is a regulatory landscape in transition. Traditional ideas, such as measuring market power by looking at prices, are being replaced by newer ways of thinking. Regulators in Europe are now focusing on issues like how companies lock in user data, build powerful networks, and control entire digital ecosystems. They are shifting from narrow rules to a broader view of how tech giants hold on to their dominance.
The DMA, in particular, represents a shift toward rules-based governance. Rather than relying on lengthy litigation, the law spells out prohibited practices, mandates compliance audits, and gives regulators faster tools to intervene.
In refining the rules, competition authorities are walking a fine line. On the one hand, they aim to protect consumers and small business using giant platforms from paying excessive prices or otherwise being advantage of due to power asymmetries. On the other hand, they need to allow innovators to reap returns from their often risky investment, which usually implies temporary exclusivity of their products, and hence market power.
A note for Canada — and others
Though Meyer’s paper focuses on Europe, its message resonates well beyond its borders. For Canada and other mid-sized economies, the European model offers a preview of what a proactive, platform-conscious policy regime might look like. As Canadian businesses grow increasingly reliant on platforms for sales, distribution, and advertising, questions about access, fairness, and strategic dependence become harder to ignore.
“We are seeing considerable policy development to address issues raised by the rise of digital platforms in the EU,” Meyer said, “and the increasing scrutiny by competition authorities affects not only firms directly engaged in the digital sector but also businesses operating within their ecosystems.”
For now, Canada remains cautious in its approach to digital competition. But as Meyer and his co-authors make clear, the rules of the game are changing—and those who shape strategy or policy would do well to watch what happens next in Europe.
Access the complete article: “Is Competition Policy Fit for the Digital Economy? A European Perspective,” by Meyer, in Academy of Management Perspectives.
