HACKER Q&A
📣 giuliomagnifico

If the Big Tech are in trouble now, what will happen after the EU’s DSA?


They were concerned about the new European laws months ago, now that are announcing layoffs and bad balance sheets, will the EU’s DSA and DMA pose a real risk for the Big Tech at end of 2023?


  👤 brookst Accepted Answer ✓
Doubtful. In a perverse way, DSA/DMA may help big tech. The increased regulatory burdens and product fragmentation will require more staff.

The biggest incumbents will be able to absorb that as a small percentage of costs, but medium- and small- competitors will have greater burdens (as a percent of effort).

So big tech may see lower margins due to increased costs, but will also see less pressure from new entrants who will face a huge penalty for crossing from upstart to gatekeeper, and who will have entire avenues of differentiation outlawed.

So my read is that DSA/DMA will increase the long tail of competition, which doesn’t matter to big tech, at the expense of reducing disruption. . . Which does matter.

So, short term reduction in profits, long term entrenchment and. . . Not so much barriers to entry, but barriers to disruption.

That’s my read. But of course it’s a very complex system and it will be interesting to see what actually happens.