The DMA requires powerful companies to allow more interoperability and to avoid preferencing their own digital services. The relevant law has sparked debates about which services should be included, excitement among smaller competitors, and changes in how companies handle essential parts of their businesses. And after years of debate, the rules will come into effect in March 2024.
The European Union has identified these 6 companies – Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft – as major digital platforms providing “essential” services such as app stores, search engines, and web browsers, and the restrictions of the DMA apply to these companies.
What does the DMA require?
By March 6, the designated 6 companies must comply with the DMA rules for the services covered under the 22 scope identified by the European Commission. By March 7, these companies must submit compliance reports to the EU, outlining how they plan to comply with the rules. European officials will then evaluate these plans with each company in workshops.
Digital Markets Act
In general, the designated platforms are required to take proactive steps that the EU believes will make digital markets fairer and more open. For example, gatekeepers must allow third-party companies to work with their own services, they cannot prefer their products over competitors’ products in rankings, and they cannot require access to app store for using third-party payment systems or other services.
What is a gatekeeper?
The European Commission assumes that a platform meeting two conditions is a gatekeeper. First, it must have an annual EU turnover of at least €7.5 billion or an average market capitalization of €75 billion over the past three financial years, and it must provide its core platform in at least three EU member states. Secondly, it must operate a core platform with at least 45 million monthly active users in the EU and have more than 10,000 active EU business users annually over the past three financial years.
The Commission has identified specific services for each designated gatekeeper that it believes are subject to DMA rules. Gatekeepers who fail to comply with the rules may face fines of up to 10% of global turnover, up to 20% for repeated violations.
What have the 6 tech giants done so far?
Alphabet: Alphabet, spanning from the dominant search engine to a popular mobile operating system, has interconnected many services to strengthen its power, giving it the broadest range of services covered by DMA. Alphabet’s proposed changes have not satisfied some smaller, specialized search platforms in particular.
Apple: Apple, with its extensive mobile software domain, is one of the most prominent targets of DMA. The company announced several changes to comply with the new rules in iOS 17.4 update. However, it’s noted that some changes were not made voluntarily and some are described as “malicious compliance.” Meta: Meta’s targeted services are concentrated in areas such as social networks and advertising platforms. The company is planning third-party inter-messaging, particularly for WhatsApp. However, it faces some restrictions and objections.
Amazon: Amazon’s services include online marketplace and advertising business. The company has taken some steps to change customer controls and business ad management. However, it has not provided detailed information on changes it will make to increase marketplace competition.
Microsoft: Microsoft’s Windows operating system falls under the regulations of DMA, altering the way the company promotes or allows users to avoid many applications and services within it. Microsoft is adapting by making various changes, and it’s currently implementing these changes on machines in the EEA markets.
ByteDance: The Chinese giant ByteDance is the only non-US company identified as a gatekeeper under DMA, with TikTok being its comprehensive service. The company has shared how TikTok plans to comply with DMA. However, it’s noteworthy that the company has objected to being identified as a gatekeeper, and there’s a political dimension to it.
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