Booking.com’s DMA approach: A bit more transparency, but not much else | By Genevieve Horchler

It’s been six months since Booking.com was designated a “gatekeeper” under the EU’s Digital Markets Act (DMA), new legislation that aims to set the stage for a fairer digital landscape. Hoteliers have been waiting anxiously to see how it would modify its platform to comply with the new regulations, and now the wait is over: Booking.com has officially published its report detailing how it’s complying with the DMA.

Unsurprisingly, nothing radical is being proposed, an approach which seems unlikely to satisfy many; certainly not hoteliers and perhaps not the European Commission. Under the new proposals, hoteliers would still not have:

• Access to direct guest contact details, including phone numbers and email addresses
• Any additional data about their advertisements on Booking.com, or the advertisements that Booking.com runs to promote their properties
• Any type of direct booking links or hotel contact details within Booking.com’s interface
• More insight into, or influence over, Booking.com’s ranking system
• Presence of their properties in Booking.com’s listings when Booking.com has no inventory to sell
• Freedom from parity clauses for non-EEA inventory

By way of contrast, Google - our best example of recent DMA compliance - made core updates to the way its search engine operates, which are evident when comparing the Google EU site against its global counterparts. Alternative hotel booking options are now displayed clearly on EU search results pages, materially changing how many people book rooms online. Clicks to hotel pages from Google’s EU metasearch dropped significantly in the aftermath of their DMA changes - by up to 30% in some cases.

If Booking.com’s proposals are accepted, we might even have a situation where the DMA has simply driven traffic from one gatekeeper to another – clearly not the intent of the law.

In this article we’ll take a closer look at some of the key issues in Booking.com’s DMA compliance response. But before we do so let’s remind ourselves of some of the reasons the DMA exists…

Purpose of the DMA: Fairness is key

Amongst other things, the EU says that thanks to the DMA:

• Business users who depend on gatekeepers to offer their services in the single market will have a fairer business environment.
• Innovators and technology start-ups will have new opportunities to compete and innovate in the online platform environment
• Consumers will have more and better services to choose from, more opportunities to switch their provider if they wish so, direct access to services, and fairer prices.

It also states that consumers should have access to search results that help them “discover the most pertinent products and services, unbiased from unwanted promotions”. Meanwhile for businesses “platforms can no longer unfairly promote their own products or services above yours in search results or ads”.

Fairness, transparency, competition, lack of bias, direct access, ease of switching, control of data. These seem to be at the heart of the intent behind the DMA.

Booking.com’s response

So how does Booking.com’s response stack up? We’d argue the answer is ‘poorly’ (and we’re not the only ones).

The report expands on some actions that have already been in flight, including the removal of Booking.com’s EU parity clauses and some key changes in how the company provides data to both guests and hotel partners. However, it sidesteps some of the topics that were most pressing for hoteliers, using a few key arguments:

Argument 1: Booking.com isn’t an advertising platform

Booking.com is claiming that they don’t "operate an online advertising service" and therefore don’t need to comply with articles 5.9, 5.10 and 6.8, which create clear guidelines for how gatekeepers provide data to businesses who advertise on their platform.

This is an interesting take, considering that they do offer advertising options like boosted listings to the million-plus EU hotels they work with. They also spend some of their multi-billion-dollar marketing budget to advertise their listings on external platforms like Google, often bidding aggressively against the hotels themselves.

Argument 2: Booking.com doesn’t use partners’ data to compete

The EU says that for businesses the DMA means "Ensuring fair play: Data generated by your business on designated BigTech platforms won't be used by them to outcompete you."

Booking.com claims compliance because “no non-public data provided or generated by partners or their customers on Booking.com [is used] to compete with partners”. At face value that doesn’t seem to align with the definition of 'data that is not publicly available' in article 6.2, but either way leaves the door open for Booking.com to use data derived from listings of hotels on their site (e.g. views, clicks, other user behavior) for commercial decision-making - surely a big advantage.

Booking.com’s advertising against individual hotels on platforms like Google is a factor here, too. Maybe they don’t use any data from their platform to inform their multi-billion dollar marketing spend. Maybe they don’t use any data from advertising to optimize their marketing overall. Either way, hoteliers today have no access to how and why Booking.com bids on their properties, nor what the results are – all hugely relevant and valuable commercial information.

Argument 3: Booking.com doesn’t stop hotels from communicating with guests outside of its platform

Booking.com’s position seems to be that they’re in compliance with article 5.4 because they don’t forbid or prevent direct communication outside the platform between hotels and guests after the guest’s first stay has started. But there’s still no commitment to share any contact details - notably the all-important email addresses - that would enable such communication, leaving the onus on the hotelier to somehow convince each guest to share them a second time.

Not exactly a level playing field (and arguably in contravention of the data sharing provisions in article 6.10).

It seems Booking.com may also fall foul of the ‘multi-homing’ provision in the DMA preamble(40), which states businesses “should be free to promote and choose the distribution channel that they consider most appropriate”. It's difficult to choose direct contact as a distribution channel if you have no way to contact the guest directly!

Argument 4: Booking.com doesn’t promote its own products over those of third parties

Booking.com is also trying to opt out of article 6.5 (thought to be another potential route to direct booking links) which requires that gatekeepers don’t self-preference by ranking their own products over those of other parties on their website. Booking.com’s argument here seems to be that because their platform only contains their own listings, they can’t be seen as promoting their own links over others.

We’d argue that only showing your own links in the region’s dominant platform is the exact type of gatekeeper behavior the DMA is working to end.

Regardless, if Booking.com’s ranking algorithm promotes hotels who deliver more benefit to Booking.com, e.g. through higher commission, that certainly looks like some form of ‘favorable treatment’. Booking.com’s listings also exclude properties where there may be inventory available from other sources (including, most-importantly, the hotel’s direct channel). In our opinion, this is exactly “a similar service of a 3rd party”, which the DMA would seemingly require they make accessible to consumers.

The lack of transparency around Booking.com’s ranking algorithm is a serious issue for hoteliers. How it chooses to rank ‘its’ services (which apparently means everything in its platform) remains a mystery, and is not addressed in the report. European hospitality trade body HOTREC sees this as a notable problem:

“Equally striking and worrying is the fact that Booking.com fails to introduce any meaningful changes to its website interface and does not address concerns regarding ranking. The underlying issue continues to be the lack of transparency on how Booking.com’s algorithms work.”
- HOTREC

Argument 5: Booking.com only needs to remove parity clauses for hotels in the EEA

Booking.com’s removal of parity clauses is welcome, but there’s a crucial caveat. Booking.com says it complies with article 5.3 because “its partners are not subject to parity requirements for inventory in the EEA”. We’d argue that the intent of the DMA means this should be applied wherever properties are located (at least for EU businesses and EU consumers).

Argument 6: Booking.com doesn’t gate services

Booking.com is claiming that article 6.6, which hoteliers believed might require adding direct contact details for hotels onto the site to facilitate “the ability of end users to switch between … services that are accessed using the core platform”, does not apply to them because they “do not intermediate, support, or otherwise gate software applications and services”. That may be correct, but it will be interesting to see if the European Commission agrees in its ‘DMA enforcement workshop’ on the 25th of November. Booking.com does seem to offer a form of gated service, since the customer booking journey is handled entirely within the platform and it retains guest contact information.

Increased compliance – but hotels deserve more

Booking.com’s response to the DMA includes some concrete changes that provide hotels with greater flexibility and data insights. We’re excited about the removal of parity clauses for Booking.com’s genius loyalty program and for more readily available, downloadable data for hotels using Booking.com’s platform. The increased access for guests to their data is also admirable, though it seems questionable how many individual guests will be concerned enough to go through such a heavyweight process.

However, there’s definitely significant room to improve, particularly when it comes to the fair treatment of hotels in Booking.com’s rankings, their responsibilities as an advertising platform, giving guests more options for how to book, and sharing of data. We aren’t surprised -- showing direct links onsite, for example, could be disastrous for Booking.com’s business model. But sidestepping these issues feels like a clear violation of the spirit of the DMA.

The next steps for Booking.com and the DMA

As Booking.com themselves said in a statement on the 14th of November:

“Our dialogue with stakeholders does not end with today’s compliance deadline; in fact, the journey is only beginning. We remain committed to continuing the constructive discussions with the European Commission and interested stakeholders.”

We definitely expect this conversation to continue, beginning with Booking.com’s DMA compliance workshop. That’s when we’ll get a first look into the European Commission’s opinions on Booking.com’s compliance report – and see what points they may be pushing back on.

We’ll be following closely to see just what comes out of the workshop, and we’ll keep you updated on any further developments. And if you’d like to learn more about how to build out a successful direct booking strategy in light of the challenge OTAs present, our direct booking experts are always happy to help.