A European Union reached an interim agreement on a series of measures that will impact tech giants. The call Digital Markets Act (DMA) imposes rules so that companies like Meta (wife of Facebook, WhatsApp e Instagram), Apple, Google, Microsoft e Amazon cannot force users to adopt their products and provide alternatives to apps, stores and platforms. Punishments in case of non-compliance with future rules are heavy.
The Digital Markets Act (or Lei dos Mercados Digitais, in the Portuguese version) has been under discussion for some time. It is part of the European Union’s approach to trying to diminish the power of so-called big tech.
There, these companies have already been fined several times for violations of competition laws and privacy issues.
If the text actually enters into force, digital services in the bloc’s countries could undergo considerable changes. The law still needs to be approved by the European Parliament and the European Council.
One of the points of the text says that companies that violate the laws can be divided. This would only happen as a last resort, if a company breaks the rules three times in eight years.
Even so, Meta, which also owns Facebook, may have to divest itself of Instagram and WhatsApp, or at least the European operations of the two apps.
Even if it doesn’t get to that point, a new thing can happen: DMA forces companies to provide interoperability between instant messaging services.
Meta’s Messenger and WhatsApp, for example, may be required to send messages to iMessage, Telegram and Signal.
The text only talks about basic functions, so it’s possible that more advanced features like stickers are left out.
Even so, we can imagine the possibility of not having to use WhatsApp just because your family and friends use it, since other apps would still guarantee communication.
Law may force Apple to accept other app stores on iPhone
Another case that is in the DMA’s crosshairs is that of Apple and its iPhone’s App Store.
Basically, there is no official way to install apps on your smartphone other than through the company store. The European Union considers that this hinders competition.
According to the new rules, the company will have to create a way to install apps other than through the App Store. Furthermore, even apps distributed through Apple’s official store will not be required to use the company’s payment system.
This point is important. He was the crux of the whole fight between Epic Games and Apple. The developer of Fortnite wanted to use their own system to process the purchase of in-game items and not pay commissions to Apple. The company and the game were eventually banned.
Spotify has also complained about this. The streaming company says it faces unfair competition from Apple Music, because it has to pay Apple commissions and charge users more, which Apple’s music platform is exempt from.
Not coincidentally, the Coalition for App Fairness supports the DMA. Epic Games and Spotify are part of the alliance, which also includes Tile and ProtonMail, among other companies smaller than the big techs.
Finally, even Apple Pay doesn’t seem to be safe. DMA would force companies to allow access to secondary components of their products, such as the NFC on iPhones. Thus, other payment wallets could reach the devices.
Who the Digital Markets Act (DMA) is for
DMA focuses on the so-called gatekeepers, companies that control central services of the digital market. Among the examples are:
- app stores;
- search engines;
- social networks;
- cloud services;
- ad providers;
- voice assistants;
However, providing one of these services is not enough to become a gatekeeper. The legislation defines some criteria.
One is to have at least 45 million monthly users or 10,000 corporate users in the European Union.
In addition, to be a gatekeeper, the company needs to control one or more platform services in at least three countries in the bloc.
Yes, they are pretty high minimums. That’s basically the tech giants like Apple, Google, Meta, Microsoft and Amazon.
The EU had already been closely investigating the power of these companies, and has now decided to structure several ideas into a single piece of legislation.
Conditions and Prohibitions
These companies will be bound by certain conditions if the DMA is approved.
They will have to give users the option of opting out of a platform’s services — using YouTube or Gmail without needing a Google account, for example.
Companies will not be able to default to their own software on their operating systems—no standard Chrome on Android, Edge on Windows, and Safari on macOS.
In addition, they will have to open their messaging applications to other developers as a way of ensuring the interoperability of core functions.
Gatekeepers will also not be able to limit developer access to supplemental parts of their products. One of the cases is smartphone NFC chips, which should impact Apple Pay, as we mentioned.
Trading companies will also need to give their marketplace sellers access to marketing or advertising data.
Finally, the European Commission will need to be informed of acquisitions or mergers of these entities.
Several practices may also be prohibited, such as:
- rank your own products above others;
- reuse private data collected in one service in another;
- place unfair conditions on corporate users;
- pre-install certain apps;
- require developers to use certain services (such as payment systems or identity providers) to be included in app stores.
Punishments for violating the DMA
If the Digital Markets Act is actually passed, companies that fit the law will face heavy penalties if they break the rules.
A first violation can result in a fine of up to 10% of global revenue. If the company repeats the error, a new fine may be applied, this time of 20%.
If the errors are systematic and there is no sign of a change in conduct, the European Union can initiate an investigation and take behavioral or structural measures. In other words, it can determine that a company is divided into smaller ones.
Who criticizes and who supports
As might be expected, not everyone is happy with such big changes in business. Google and Apple appear among the biggest critics.
Apple says it is concerned about some of the DMA measures. According to the company, they can create unnecessary privacy and security vulnerabilities for users.
Google says it supports the legislation’s ambitions, but believes that some of the rules could reduce innovation and choices available to European citizens.
Somewhat surprisingly, Microsoft supports the novelty. Casper Klynge, vice president of the company, said on his LinkedIn that “open platforms are important in innovation for the future”.
With information: MacRumors, Android Police.