On March 6, 2024, the European Union becomes the strictest territory in terms of digital regulation. The Digital Markets Act aims to restrict the dominant positions of large American services, with changes on an unprecedented scale.
For tech giants, March 6, 2024 is a dark date. Often tickled by the authorities, who all dream of regulating them, the “GAFAM” are for the first time forced to change, under pressure from the European Union.
After a Digital Services Act (DSA) focused on online transparency, the time has come for the Digital Markets Act (DMA). This new regulation aims to regulate all the practices of digital giants, even if it means forcing them to adopt a different strategy in Europe.
A digital break from the world
Tech giants don’t like DMA. For months, they have been communicating publicly, particularly to the press, about the fact that this regulation would be designed by people who understand nothing about digital technology. It would also bring security problems and force tech giants to cut the market in two, by marketing less complete products in Europe, to be able to comply with local rules. There is an element of truth, but also an element of bluff.
Regardless, the tech giants are right about one thing: the DMA divides the market in two, because they decided it that way. Almost all of the changes announced by brands are only valid for products sold in Europe, where previous regulations had brought global changes.
What DMA changes for users
The Digital Markets Act attacks practices that could be considered anti-competitive, even if the European Union avoids court decisions. All services with more than 45 million users are affected (10% of EU inhabitants).
Concretely, it aims to prohibit the installation of applications by default, the preference of an in-house service rather than a competitor, the installation of applications from a single source, payment commissions in application stores and contactless payment services without competitors. To another extent, the DMA also wants to transform messaging applications, by making them interoperable, so that they can work with each other. The DMA also regulates online advertising, increasing transparency.
What the DMA changes at Apple
The threshold of 45 million European users is important, since it allows Apple to “bypass” the DMA. The Californian brand considers that only its iPhone is eligible for the regulation since the iPad, the Mac or the Watch are less popular (23 million on iPad, compared to 101 million for the iPhone). The changes below therefore only concern European iPhones:
- Apple allows developers to create app stores that compete with the App Store, capable of installing software. The brand nevertheless intends to tax these installations, by imposing a new tax of €0.50 per download (beyond the first million free). Apple also plans to verify each application offered on these stores, to authenticate their security.
- Apple offers developers, only in Europe, not to pay the 30% tax for purchases sold from the App Store. They can go to 17% or 20%, or to 0% if they set up their own payment engine (PayPal for example). But if they decide to opt for this system, they will have to pay €0.50 per download to Apple.
- By opening Safari, an iPhone user has the option to change it to another browser. These other browsers, only in Europe, may use a web engine different from WebKit, the Apple engine required on iPhone.
- Apple Pay is no longer the only payment app. Banks can create their own software and use the NFC chip, like on Android. Several banks could even leave Apple Pay, according to iGeneration.
With all these changes, Apple is offering Europeans one of the biggest updates in the history of the iPhone. With its new tax, verifications and scary messages (full screen panels when installing an application outside the App Store, for example), Apple nevertheless reduces the attractiveness of these changes. The vast majority of users should certainly never go anywhere other than the App Store, while not many developers will avoid it.
What the DMA changes at Google
In the Android ecosystem, most of the rules imposed by the DMA are already in force (the European Union was inspired by it to impose changes on Apple). The only significant change concerns the possibility of paying outside the Play Store, with PayPal, for example, to avoid paying 30% commission to Google.
Obviously, Google is not just about Android. Several popular services, such as Google Search, Google Maps, Google Shopping or YouTube are also affected. The European Union does not want Google to use its search engine to promote it, since it is an anti-competitive measure for their rivals. Concretely, this means that a Google search can no longer suggest launching Google Maps or YouTube.
With the DMA, Google’s algorithm is forced to behave differently in Europe, to treat Google services as competing services. Google will also offer users of its services, such as YouTube, to create an account separate from their Google accounts, so as not to mix all the data.
What the DMA changes at Meta
At Meta too, the obligation to offer a dissociation of services is coming. By opening Messenger, Instagram or Threads, users are encouraged to create separate accounts, so as not to use their Facebook accounts. The features should remain the same.
The unknown concerns messaging, since Meta has not communicated much on this aspect. WhatsApp and Messenger must be able to work together, with the possibility of sending a message to a user of application B from application A. These are the only two services retained in this category, while iMessage managed to get out of it (Instagram could also be affected, even if it is listed in the social networks category, and not messaging).
What DMA changes at Microsoft
In the European Union, Microsoft is rolling out a special Windows update with new features. Among them :
- The ability to uninstall all system apps, like Camera, Cortana, Bing, Microsoft Edge, and Photos.
- The ability to desynchronize a Microsoft account from a Windows PC (Elon Musk will be happy).
- Some services, like Copilot, will not be integrated into Windows updates, to give users control.
What the DMA changes at Amazon
Amazon has not yet communicated on the planned changes, but it should be forced to review its algorithm to no longer promote Amazon products and services. On the advertising side, it must also strengthen transparency for companies that sell on its marketplace.
A fine in billions of euros in the event of an infringement
Will the tech giants respect the DMA? If everyone seems to be trying to get around it, everyone seems to agree to comply with it. It must be said that the fine could exceed 20% of global turnover in the event of an infringement, which could be very costly for the multinationals concerned.
For GAFAM competitors, the DMA is obviously good news. For customers, its impact is still to be measured, since the safeguards put in place by brands could limit its potential. Another question: won’t this Internet cut in two slow down innovation in Europe? The European Union hopes for the opposite, but the American giants could be tempted to take revenge.
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