Today, the European Commission announced that it has opened an investigation into Alphabet, Apple, and Meta. The three tech companies have made changes to comply with the Digital Markets Act (DMA), but these may not be enough. If companies do not comply with the new European legislation, they risk sky-high fines.
The European Commission announces the investigation via a press release.
This is the DMA in a nutshell
The Digital Markets Act (DMA) was created to protect European consumers against the power of international technology companies. The law should enable more competition in the digital market. For example, WhatsApp users should be able to chat with someone who uses Signal, for example, and vice versa.
The DMA also stipulates that tech companies may not favour their own products. This means, among other things, that Microsoft and Google are not allowed to set their web browser as the default browser on devices. App developers should also no longer be forced to use an app store’s payment system or place their own products or services at the top of search results. Another spearhead of the DMA is privacy. Companies will soon only be allowed to combine data from different platforms if users give explicit permission for this.
Companies that have at least 45 million monthly active users offer their service in at least three EU member states, have achieved an annual turnover of 7.5 billion euros in the last three years and have a market capitalization of at least 75 billion euros fall under the DMA. Brussels determined last year that Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft are so-called ‘gatekeepers’ that offer core platform services in the EU, including TikTok, WhatsApp and Google Play.
Tech companies may be violating these rules
The European Commission is concerned that Alphabet and Apple, despite the measures they have taken, are imposing various restrictions and restrictions on app developers. For example, developers cannot freely communicate about offers outside the App Store and Play Store. Furthermore, tech companies would impose mandatory costs on developers if they wanted to offer their services through the companies’ app stores.
In addition, the EU executive committee suspects that Alphabet and Amazon may give priority to their own products and services in the search results of search engines or their own online store. Third-party producers and services are, therefore, not offered in a fair and non-discriminatory manner compared to our own services.
Furthermore, the European Commission suspects that Apple has not done enough to enable users to easily delete software applications on iOS. It would also make it unnecessarily difficult to change default settings on the operating system. Furthermore, Apple’s choice screen prevents the user from selecting an alternative web browser or search engine.
Finally, Brussels criticizes Meta’s ‘Pay or Okay’ revenue model. She fears that the “binary choice” between paying or agreeing to the collection and sharing of customer data for targeted advertising is not a viable alternative for users who do not want to give up their personal data.
Tech companies risk hefty fines
The European Commission wants to complete the investigation within one year. If the investigation gives reason to do so, Alphabet, Apple and Meta will be told what measures they must take to remove the Commission’s objections. In case of violation, the Commission can decide to impose fines of up to 10 per cent of the company’s annual worldwide turnover. In the case of systematic infringements, fines can amount to 20 per cent of global annual turnover.
“We have been talking to gatekeepers for months to help them adapt, and we are already seeing changes in the market. However, we are not convinced that the solutions from Alphabet, Apple and Meta meet their commitments to a fairer and more open digital space for European citizens and businesses. If our investigation shows that the DMA is not fully complied with, gatekeepers could face heavy fines,” said European Commissioner for the Internal Market Thierry Breton in response to the announcement of the investigation.
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