The Impact of the EU’s Digital Markets Act: An Event Study

This study investigates the impact of the EU's Digital Markets Act (DMA), a regulation aimed at tackling the dominance of Big Tech firms. By curbing monopolistic practices of powerful platforms (“gatekeepers”) such as Alphabet, Amazon, and Meta, the regulation addresses the question of fairness and contestability within the EU’s digital market. Using an event study method, we assess investors' reactions to the announcement of the DMA and the implementation of DMA provisions by the gatekeepers. The findings reveal initial optimism, with positive market responses to regulatory announcements perhaps driven by hopes of increased competition and value capture. However, this optimism fades during the implementation stage, reflecting potential investor concerns about the challenges of enforcing compliance. These mixed reactions highlight the complexities of regulating digital markets and underscore the need for more robust enforcement mechanisms. The study suggests that the success of DMA requires strict monitoring to deter powerful platforms.