In a huge blow to Big Tech, the EU is stepping up to regulate the long-criticized, monopolistic market strategies of these behemoths.
On Monday, the European Council Digital Markets Act (DMA), a set of new rules to create fairer online competition.
The law aims to level digital playing field, by establishing clear rights and rules for major online platforms (known as ‘gatekeepers’), making it more difficult for them to abuse their position.
According to Ivan Bartoš, Deputy Prime Minister for Digitization and Minister for Regional Development:
Thanks to the DMA, we ensure fair online competition, more convenience for consumers and new opportunities for small businesses.
The gatekeepers addressing the DMA addresses are ubiquitous – we all use their services on a daily basis. However, their power grows to such an extent that competition is negatively affected.
The gatekeepers category includes online search engines, app stores, and social media platforms. It also targets messaging apps and operating systems, as well as advertising, e-commerce, and cloud services.
To qualify as a gatekeeper, a platform must either have an annual turnover of at least €7.5 billion ($8.2 billion) within the EU over the past three years, or have a market value of at least €75 billion ($ 82 billion). It must also have at least 45 million monthly users and 10,000 business users in the EU.
A guide to the historic decision
Gatekeepers are required to ensure the following:
- They must inform the European Commission about their acquisitions and mergers.
- Unsubscribing from core platform services should be as easy as subscribing.
- The basic functionalities of instant messaging services must be interoperable, which means that users must be able to exchange messages and send voice messages or files via messaging apps.
- Business users must have access to their marketing or advertising performance data on the platform.
The imposed bans are even more aggressive. Gatekeepers can no longer:
- Ranking their own products or services higher than those of others.
- Preinstall certain apps or software or prevent users from easily uninstalling these apps or software.
- Require major software (eg web browsers) to be installed by default when installing an operating system.
- Prevent developers from using third-party payment platforms for app sales.
- Reuse private information collected during one service for purposes of another service.
If they don’t comply with the DMA’s rules within six months, they risk being fined up to 10% of their total global sales — up to 20% for repeated violations.
And if they break the rules at least three times in eight years, the European Commission can launch a market investigation and impose behavioral or structural measures if necessary.
Google, Apple, Meta and Amazon hit hardest
In fact, the new rules ban much of what are currently the core practices of tech giants.
Think about it.
For example, Apple will be forced to allow alternatives to downloading apps and third-party payments from the App Store — a move it has resisted, as it would cost the 30% commission it charges on transactions. .
Google and Meta will have to stop collecting data from the various services they own to serve targeted ads without users’ consent.
Apple and Google will also have to say goodbye to the many default apps that they provide with installation.
As for Amazon, it will have to stop prioritizing its own goods over third-party products and will be barred from using data collected from third-party sellers on its services to offer competing products of its own.
The DMA will certainly cost Big Tech a lot of money – and it was about time. They have monopolized the market for too long, reduced business opportunities for smaller companies and startups, and deprived their users of choice.
Let’s hope that EU legislation will mark the beginning of a fairer digital space and inspire other countries to follow suit.