March 7 marks the day that six major tech companies — Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft — must provide compliance reports for the European Union’s Digital Markets Act, which has been in effect since May 2023. Here is how these so-called “gatekeeper” companies have complied so far and who else the DMA may apply to.
The big change effective March 7: App developers can expect to see new fees on the Google Play Store if they want to direct users to sites or apps outside Google’s ecosystem.
The purpose of the DMA is to ensure digital markets are “fair and open,” promoting competition and innovation and keeping companies from encouraging users to explore only within that one company’s ecosystem of apps and products.
Which companies are gatekeepers under the DMA?
In September 2023, the European Commission labeled Alphabet (parent company of Google), Amazon, Apple, ByteDance, Meta and Microsoft “gatekeepers,” or providers of certain “core platform services” like Google Maps, Apple AppStore and Amazon Marketplace. There are 22 core platform services. Booking, ByteDance and X notified the European Commission on March 1 that they are potential candidates for gatekeeper status.
ByteDance is mentioned twice because, in November 2023, the company appealed its gatekeeper status. The company argued that its main product, TikTok, isn’t well established enough to count. As of March 2024, it’s back to being a “potential” gatekeeper.
SEE: The EU’s regulations may have impacts across the world, including in Australia. (TechRepublic)
Gatekeepers must submit DMA compliance reports by March 7
By March 7, designated gatekeeper organizations must submit compliance reports to the EU, outlining how they plan to follow the Act. Next, each organization will work with the Commission individually to refine those plans.
If organizations don’t file by the deadline or don’t make changes to come into compliance with the DMA, they can face fines. The Commission could fine noncompliant organizations up to 10% of the organization’s total worldwide turnover. Repeated infringement could increase that number to 20%. In the most severe cases, the Commission could oblige a gatekeeper to sell all or parts of their business, or ban them from acquiring certain services.
Who does the DMA apply to?
The DMA applies to organizations that have a major economic impact in the EU (at least €7.5 billion of revenue in the EU per year for the last three fiscal years) and have more than 45 million monthly active end users in the EU, or more than 10,000 yearly active business users for at least three fiscal years.
Apple’s responses and $1.95 billion fine
In January 2024, Apple announced changes to the App Store in response to the DMA that included fees for app developers and a €0.50 per first install Core Technology Fee for applications with more than one million installs every year. Epic Games CEO Tim Sweeney called this “malicious compliance” in January.
Other services that use the App Store have been unhappy with Apple’s response as well. On March 1, a group of companies including Spotify addressed the European Commission, saying Apple’s attempt at DMA compliance “seems designed to maintain and even amplify Apple’s exploitation of its dominance over app developers.”
The DMA fined Apple $1.95 billion on March 4 specifically because of the protest started by Spotify regarding how Apple promotes its own music service, the AP reported. Apple plans to appeal the fine.
Google actions for DMA compliance
Some significant changes to Google products and services were announced on March 5. These changes include:
- Removal of some Google Search widgets, such as Google Flights in order to allow more access to individual businesses.
- New settings for choosing how data is shared between different Google services.
- “Choice screens” for Android and Chrome to encourage the user to pick their preferred search engine or browser.
Android already allows third-party app stores and side-loading, which the DMA has pushed Apple to do with its AppStore.
On March 6, Google launched a feature that lets developers of apps distributed through the Google Play Store lead users in the European Economic Area outside the app, including for advertorial promotions, to visit other app stores or to visit the developer’s website.
Developers enrolling in the Google external offers program will pay two fees for the first two years:
- An initial acquisition fee of 5% for auto-renewing subscriptions and 10% for other offers.
- An ongoing services fee of 7% for auto-renewing subscriptions and 17% for other offers.
Steps to be DMA compliant from Meta, Amazon, ByteDance
The impact of the DMA on industry and customers
It’s still too early to tell what the most significant impact of the DMA will be on the industry and customers.
“For the DMA to be successful, enforcement and compliance assessment should be proportionate and unbiased, taking into account the significant differences between gatekeepers, as well as how these services work in reality,” wrote Daniel Friedlaender, senior vice president and head of Europe’s Computer and Communications Industry Association, in a statement.
“One-size-fits-all DMA compliance solutions simply do not exist,” Friedlaender said. “The Commission must allow tech companies to still differentiate themselves from others. If not, online services might be forced to become more alike, or forced to abandon features that set them apart from their competitors.”
