The Law and Economics of Art. 5(2) DMA: The Case of Meta

To what extent can Art. 5(2) of the Digital Markets Act (DMA) limit effectively the data combination abilities of gatekeepers? Gatekeepers are able to achieve significant data advantages by collecting and combining personal data from various sources. Looking at the example of Meta, it can use the resulting data advantages not only for entrenching further the leading position of its “core platform services†(CPS) but also for strengthening the market position of its remaining products and services. Such data combination practices are therefore limited by Art. 5(2) DMA, unless gatekeepers have presented users with the specific choice and received their consent. The actual functioning of this obligation and its economic effects are, however, still unclear. Thus, this paper discusses the law and economics of Art. 5(2) DMA by focusing on the example of Meta: Despite being in theory able to reduce the data advantages of the gatekeeper, its economic effects will depend crucially on the actual choices of its users. Nevertheless, Meta tries to comply with the obligation by implementing a “consent or pay†model. Any analysis of this obligation needs therefore to consider a legal interplay between Art. 5(2) DMA and the opinion 08/2024 of the European Data Protection Board (EDPB), which might make it necessary for firms such as Meta to implement a “third option†in its models. Hence, I propose an analytical framework which considers such a legal interplay and which allows to examine critically compliance questions: While Meta’s updated model with three options does still suffer from different compliance weaknesses, the results of a non-compliance investigation of the European Commission (EC) on Meta’s initial binary solution can be criticized in particular for a lack of economic arguments. More research that incorporates both the paramount role of consumers as well as the legal interplay is required to prove that Art. 5(2) DMA will be in fact a successful obligation.