The EU’s Digital Markets Act (DMA) is coming into action on March 7, 2024, and it’s making Big Tech sweat. The new antitrust EU regulation’s aim is to make digital markets more equitable and competitive, and is doing so by categorising certain big monopolising
companies as ‘gatekeepers’.
Gatekeepers are defined as having core platform offerings in at least three EU member states, 45 million monthly active end users within the EU, and 10,000 yearly active business users established in the EU.
What is the DMA?
The
European Commission outlined that the DMA would benefit businesses that depend on their gatekeepers to offer their services, SMEs that need room to compete and grow, and consumers that will have the choice between an array of services at fairer prices,
rather than being backed into a corner by Big Tech.
The following will be mandatory compliance for gatekeepers under the DMA:
- Allow third-parties to inter-operate within gatekeeper’s services in certain situations, to access data generated by their business on the gatekeeper's platform;
- Allow third-parties to advertise on the gatekeeper's platform and provide offers and contracts to consumers outside the gatekeeper's platform;
- No longer rank gatekeeper products higher than third-party products on gatekeeper platforms;
- Allow customers to keep third-party pre-installed apps if they wish; and
- Track users outside of gatekeeper platforms for targeted advertising without consent.
The penalty for gatekeepers if they do not oblige to DMA regulation are fines of up to 10% of the company’s total annual worldwide turnover, 20% if infringements are repeated, periodic penalties of up to 5% of the daily average turnover, and if infringements
are consistently repeated then additional remedies will be imposed after investigation, proportionate to the offence committed.
What are the repercussions for Big Tech?
The initial gatekeepers were
revealed in September 2023, to be massive tech companies Alphabet (Google’s parent company), Meta, ByteDance (parent to TikTok), Microsoft, Amazon, and Apple.
Recently, the
EU announced that Apple’s iMessage, Microsoft Advertising, and Microsoft’s browser Edge and search engine Bing do not fit the threshold for gatekeepers under the DMA, and thereby do not have to comply to the legislation.
The gatekeepers have until March 7 to comply with the regulation, which includes a swift death to Apple’s mandatory 30% fee for in-app purchases.
Spotify has protested the fee, stating that Apple denies consumers choice in what is available on the App Store, imposes a discriminatory tax, and propagates anti-competitive behaviour. Last year Spotify announced
that Premium members would no longer be permitted to pay for services through Apple’s in-app purchases to avoid the fee.
In January,
Spotify responded in a blog post to the DMA announcement stating that they will be able to make their platform easier to use for users and have a whole range of new opportunities that include secure in-app payments, direct purchases, and direct communication
via the Spotify app on offerings, promotions, and prices. The post read:
“It should be this easy for every single Spotify customer everywhere. But if you live outside certain markets, you will continue to encounter frustrating roadblocks because of Apple’s ridiculous rules. That’s why developers everywhere are continuing
to ask other governments to pass their own laws like the DMA. Like Spotify, they want to provide the best user experience for their customers. We’ll keep fighting because freedom from gatekeepers means more choice for consumers and positive impact for artists,
authors, creators and developers everywhere.”
In January, major tech and media companies signed an open letter to tech giants, accusing them of non-compliance and demanding that the DMA regulate big tech to open the playing field. The 24 signatories of the letter include Open-Xchange, Ecosia, Qwant,
Element, and Shibsted. Tech giants are being held accountable for unfair practices, and smaller corporations are readying their pitchforks to back the DMA with all their rage.
The open letter stated that the gatekeepers have yet to share solutions with third-parties on solutions for non-compliance with the DMA, and demand more clarity on what fallout will occur on March 7.
Christian Kroll, CEO of
Ecosia commented to CNBC on the open letter: “There has always been a huge challenge: Google has had the monopoly for over a decade, but I think we are currently more optimistic than that. It is yet to be determined what will happen on March 7 but we know
that 2024 must be the year of fair choice in online search for Europe. EU policy makers have the choice to deliver a digital market that delivers fair competition and choice for European consumers and business.”
What are Big Tech’s responses to the DMA?
Apple announced that it will
require developers to submit apps for review and pay a “core technology” fee of €0.50, and on top of that, require developers to pay a 17% commission fee on digital goods purchased. Whether the DMA will allow Apple’s (not really) new fees remains to be
seen, but if there is pushback, there will be a long-running battle between Apple and its competitors that will take more than a few years to be won on either side.
Tim Sweeney, chief executive of Epic Games, which developed the popularised video game Fortnite, criticised the move from Apple, calling it “hot garbage”.
Spotify similarly expressed discontent about Apple’s attempt to maintain control over the market, calling it “a complete and total farce”, and “abuse of power”.
Meta and Google have released updated on how their services will change under the DMA;
Google will have more consents for linked services, an adjusted search result page, choice screens for users to change browsers, and further data portability.
Meta will similarly be offering consumers more choices on how they can use Facebook, Instagram, Messenger, Facebook Marketplace, and Facebook Gaming in what accounts they want to link, how much information they would like to share, subscribe to stop seeing
ads, and more. The DMA could open more opportunities for Meta, allowing various Meta platforms to share users more seamlessly.
Will the DMA make a difference?
The process of the DMA actually being able to take action and force Big Tech to break their monopolies will likely be a slow-moving ordeal, with companies such as Apple doing all that is possible to sidestep the Act and find loopholes. Already,
Android devices issue warnings when third-party apps are being installed to dissuade users from doing so, and other companies are likely to follow suit.
The DMA is designed to level the playing field and offer the consumer the freedom to choose what they want from their devices, rather than being backed into a corner by a Big Tech bully. The possibilities for more development and freedom in the digital economy,
which is currently dominated by a select few companies, is appealing and could change the way EU users operate on their devices.
Optimistically, IOS users will be able to download on-Apple apps in the first half of 2024, which previously required users to jailbreak their IOS devices to do so (think of the jailbreak drama that occurred during the Flappy Bird era). You can almost hear
the monopoly shatter, alongside the tragic, absurd tears of billionaire executives as they pound their fists and demand special treatment.
However, we will not be able to witness the outcome of the DMA until after March 7, and even that will only be the beginning. There is a long road ahead for freedom in the digital market, but in the end the consumer will be the winner.