Google began developing changes to comply with the European Union’s DMA (Digital Markets Act) requirements, where the app negatively impacted hotel campaigns in Google Hotel Ads.
Just over three months following implementation, click-through data has shown a 30% decrease in traffic volume in EU markets affected by DMA implementation compared with those markets where DMA has not been implemented.
In July 2023, the European Union designated six digital companies as gatekeepers, Amazon, Apple, ByteDance (TikTok), Alphabet (Google), Meta (Facebook) and Microsoft, on the basis of the relevance of the 22 platforms operated by these companies. In the case of Google, the gatekeeper designation means it cannot include its own vertical services (Google Maps, Google Flights or Google Hotel Ads) in its search results pages.
This means that presentation of hotel offers to users based in DMA markets is less organized, clear and intuitive.
Prior to the DMA, Google’s taxonomy of results was the result of decades of effort by the company to refine its results in order to provide an optimized search experience that would connect supply and demand in a way that was ideal for both.
This pre-DMA search experience offered hotels participating directly in the Google Hotel Ads product the option to present their inventory (availability and room rates) in a way that was both efficient from the standpoint of distribution cost and enriched for the user, as it integrated the experience of other services, e.g. Google Maps.
The key result of the implementation of the DMA for hotels is that they have lost visibility in the markets affected by the DMA and as such they have lost direct sales capacity, their profitability has been reduced and their dependence on intermediaries increased.
The EU, in its efforts to make the DMA a fairer, more balanced market, is obliging gatekeepers to adapt to the regulation. As a result, these changes are subjecting hotels to the toll of intermediation, strangling direct sales and holding users and hotels captive to less profitable, less independent business models.
Now that Booking.com has been ratified as a gatekeeper, it remains to be seen what measures are imposed and the consequent degree of compliance. In any event, assuming they prove restrictive and favorable to the hotel industry, Booking.com would have gained more than a year’s competitive advantage by enjoying the increased visibility afforded by the changes imposed by the DMA since January 2024.
The EU took an asymmetrical approach to the interpretation of its own rules by excluding Booking.com from the first group of designated gatekeepers.
While the EU has finally ratified Booking.com as gatekeeper, any limitations it might impose on the OTA are unlikely to take effect before the end of 2024. As we cannot know the scope of these changes, the only certainty we have is that Booking.com will have enjoyed at least eleven months of competitive advantage as a result of the EU’s erratic application of the DMA.
