The Digital Markets Act Is Hurting Europeans. It’s Time to Put Progress, Free Markets, and Competition First

Europe’s greatest challenge today is digital competitiveness. Increasingly, Europeans themselves are recognizing that the regulatory frenzy unleashed by Brussels bureaucrats is undermining the continent’s economic growth. The European Union is falling behind the United States and China, and even its own institutions acknowledge the problem - writes Alessandro Bertoldi
Executive Director Milton Friedman Institute

The Draghi Report, commissioned by the European Commission and prepared by former European Central Bank President and Italian Prime Minister Mario Draghi, delivered a stark warning: Europe suffers from a serious innovation deficit and lacks dynamism in high-growth technology markets. Yet, just as the report sounded the alarm, the European Union doubled down on regulations that burden precisely the industries it needs to strengthen.

The Digital Markets Act (DMA) is perhaps the clearest example. With its prescriptive, ex ante approach, the regulation risks freezing markets instead of making them more competitive. The problem is not simply that it targets large digital platforms. It also reduces functionality, increases compliance costs, and ultimately harms European businesses and consumers alike.

The numbers are telling. According to recent studies, the loss in annual revenue for European businesses resulting from reduced personalization and diminished digital services could reach as much as €114 billion. Restrictions on personalized advertising alone are estimated to cost European companies approximately €8.5 billion every year. Meanwhile, a survey of 5,000 respondents across 20 countries found that two-thirds of users now need more clicks or more complex searches to find the products they want, while more than 40 percent said they would even be willing to pay to return to the pre-DMA experience.

The real-world consequences are already becoming apparent. The DMA has been cited as the primary reason for delaying the rollout of Apple’s new Siri AI features on iOS 27 in Europe. As a result, European consumers are being denied access to innovations that are already available elsewhere because of a regulatory framework that prioritizes centralized intervention over free markets, consumer choice, and technological progress.

Despite this evidence, the European Commission has declared the DMA “fit for purpose.” That conclusion sits uneasily alongside Europe’s own debate on competitiveness. If policymakers are genuinely committed to restoring innovation and economic growth, the answer cannot be more regulation. Instead, Europe must return to the principles that have historically driven prosperity: open competition, lower barriers to entry, and confidence in the decisions of entrepreneurs and consumers rather than bureaucratic planning.

Nor is the problem confined to the technology sector. The Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) impose substantial compliance costs and regulatory obligations that discourage investment and economic expansion. Together with the DMA, these measures reflect a regulatory philosophy that too often views business as a problem to be controlled rather than as the engine of prosperity it should be allowed to become.

In today’s global economy, competing with one hand tied behind your back is a recipe for decline. Businesses naturally direct their investments, talent, and innovation toward jurisdictions that provide greater economic freedom. Countries such as the United Arab Emirates and Argentina are actively encouraging investment in emerging technologies by creating business-friendly environments instead of imposing punitive regulatory burdens. Europe should stop penalizing those who create value and instead establish the conditions for markets to thrive through simple, stable, and limited rules that protect competition without attempting to replace it.

Europe must become a continent that says “yes”: yes to innovation, yes to growth, and yes to success. The current culture of restrictions, prohibitions, and ever-expanding regulation risks driving technological progress away from the continent altogether. If Europe continues down this path, its citizens will eventually find themselves paying more for innovations developed, owned, and controlled elsewhere.

The European Commission should follow the recommendations contained in its own competitiveness reports and undertake a fundamental review of the Digital Markets Act. That process should begin by repealing or significantly narrowing those provisions that undermine consumer welfare, discourage innovation, and weaken Europe’s competitive position in the global economy.

Economic freedom is not a luxury—it is a fundamental right and the foundation of prosperity. Europe still has time to choose the path of open markets, innovation, and growth. But that choice must be made now.

Alessandro Bertoldi
Executive Director Milton Friedman Institute

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