Introduction (without footnotes)
Whenever the EU Digital Markets Act (DMA) is discussed, innovation is invariably at the forefront, with arguments oscillating between concerns that the DMA may stifle innovation and claims that its fundamental objective is precisely the opposite. Critics' arguments centre on the risk that the DMA’s obligations will undermine the innovation incentives of the firms targeted by the regulation, the so-called gatekeepers, and will reduce innovation overall by erecting regulatory barriers to the launch of new products and services in the EU. Supporters highlight that breaking open gatekeeper dominance is a key driver of innovation, ultimately serving consumers in several ways. It helps restore competition among providers of the services for which they are designated as gatekeepers, thereby reviving the incentives for new entrants and challenger platforms to bring forward their innovations as well as for incumbents to continue innovating. It also removes the handbrake on innovation in adjacent markets, where gatekeepers have frequently managed to leverage their entrenched position, and where their conduct has hindered other firms from innovating and growing.
These debates accompanied and shaped the gestation of the DMA, and far from subsiding, they have since intensified. The first reason is that we have already entered the phase in which the DMA is being judged by its outcomes. More than a year has passed since this new regulatory tool entered into full application, and the European Commission as sole enforcer now faces growing pressure to show that the instrument is on track to delivering tangible benefits. Second, the renewed focus on economic growth in the EU and elsewhere has naturally shifted attention back to innovation. To avoid being dismissed as mere red tape to be cut, the DMA is now under heightened pressure to deliver in terms of fostering innovation, a recognised driver of economic growth. This segues into the third reason, which has only recently gained salience: the imperative of digital sovereignty for the EU, and the question of whether the DMA can meaningfully contribute to it, or should instead be regarded as a distraction. Debates over how to achieve digital sovereignty have sharpened amid the sharp downturn in transatlantic relations. Under the second Trump administration, tensions have flared, with Washington accusing the EU of using the DMA to unfairly target U.S. Big Tech and hinder innovation. In response to escalating trade tensions with the Trump administration, the EU has justified the DMA and its enforcement by arguing that it does not discriminate against U.S. firms and that it promotes innovation, including by American companies. (Little Tech).
The promotion of innovation is arguably the most meaningful, but also potentially elusive, benchmark by which the DMA starts being evaluated. This paper seeks to contribute to a critical assessment of the DMA’s relationship with innovation by proposing an evolutionary economics framework. Evolutionary economics emphasises how markets evolve through the iterative processes of variation (e.g., new ideas entering the system), selection (by consumers, other users), and adaptation (by incumbents, their actual and potential competitors, as well as by regulators). The paper makes the case that a variation–selection–adaptation framework, inspired by evolutionary economics, offers a structured lens through which to understand how regulation such as the DMA can shape market environments to foster innovation. The VSA framework, as we shall see, not only proves particularly useful in analysing the DMA and surfacing new research questions, but also offers a roadmap and a coherent structure for assessing its effectiveness in terms of the promotion of innovation, helping to clarify what is likely to work, what could be improved, and where meaningful change is needed.
The paper begins with a brief introduction to the variation, selection, adaptation framework, hereafter the VSA Framework, and then applies it to the DMA (Section 2). This is followed by a case study using the VSA Framework to assess how effectively the DMA promotes innovation within one of its designated core platform services, online search engines (Section 3). The paper concludes with reflections that summarise the potential of the framework, while also acknowledging some of its limitations (Section 4).
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