A new era is set to dawn in the EU with more competition for digital offerings. In recent months, large platforms have had to adapt their offerings to the rules of the Digital Markets Act (DMA).
What is the idea of DMA?
The law is intended to ensure more competition in digital services and better opportunities for new rivals. The basic assumption is that some large platform operators have become so powerful that they can cement their market position. The DMA should break this rigidity with rules for the so-called gatekeepers.
Which companies and services are affected?
The EU Commission has so far identified 22 “gatekeeper” services from six companies. Not surprisingly, these include the US heavyweights Apple, Amazon, Microsoft, Google parent Alphabet and the Facebook group Meta. The video app TikTok from the Bytedance company, which originally comes from China, was also added to the list.
What do you notice as a user?
Two DMA editions stand out. Meta’s WhatsApp chat service, which is popular in Germany, is to be opened up to other services – and Apple must for the first time allow apps from sources other than the in-house App Store to be installed on the iPhone. However: While WhatsApp has to create access, competing services such as Signal and Threema do not want to network at all. And with Apple’s regulation for other download platforms, it is unclear how many developers will agree to it – or whether they would prefer to just stay in the company’s App Store as before.
How does WhatsApp want to implement interoperability?
Messages from other services should end up in a separate area. This should make it clear that other security standards could apply to the messages, WhatsApp manager Dick Brouwer told Wired magazine. WhatsApp uses Signal’s encryption technology – and this makes networking with other services that also use it easier. However, other reliable encryption protocols will also be supported.
Why don’t other services want to join in?
Signal points out that the service goes beyond protecting content: “We have developed novel techniques to also encrypt sensitive metadata such as profile names and photos, contact lists, group memberships and information about who is sending messages to whom.” Other major apps “didn’t come close to meeting Signal’s privacy standards.” At Threema it was said that WhatsApp specifies all the protocols, “and we do not know for sure what happens to the user data when it is transferred to WhatsApp, especially since WhatsApp is not open source”. There are also unresolved problems such as addressing, since WhatsApp uses the telephone number and Threema uses a randomly generated ID. This could potentially deanonymize Threema users.
How is this supposed to work with other app stores on the iPhone?
App developers can either leave everything as it is and only sell their applications via Apple’s App Store, as before, with a levy of 15 or 30 percent of the proceeds from digital goods and subscriptions – or they can make use of the new options. Then different conditions apply to them. For applications that you sell via Apple’s App Store, the levy drops to 10 and 17 percent respectively – plus a further 3 percent if you use the group’s billing system. New is a “core technology levy” of 50 cents for the first installation of an app in a twelve-month period, which is due after one million downloads. For apps that are sold through other marketplaces, Apple should only get them. If developers switch to the new model, there is no going back.
Do app providers want to get involved?
The gaming company Epic Games, whose app “Fortnite” was banned from Apple’s App Store after violating the rules, wants to bring its own download marketplace to the iPhone. However, shortly before the DMA rules came into effect, Apple blocked Epic’s designated developer account. The app marketplace Setapp, which allows applications to be used in a subscription model, plans to launch in April. At the same time, the music streaming market leader Spotify and Epic, for example, strongly criticize the new rules. Spotify manager Avery Gardiner, who is responsible for competition, says Apple’s implementation “doesn’t even come close” to meeting the DMA requirements.
Where do critics see problems?
From Spotify’s perspective, the switch to a new fee structure and the “core technology levy”, among other things, contradict the DMA. Spotify is one of the larger services (around one percent of app providers according to Apple’s calculations) for which the “core technology levy” would be due. And it could really hit the bank: Because it wouldn’t just have to be paid for by currently active users. Even if someone only has the app unused on their iPhone, it costs Spotify 50 cents for the first automatic update in a twelve-month period. Epic and Spotify, among others, criticize Apple for designing the new taxes in such a way that it is not attractive or affordable for developers to sell their apps through other stores.
How does Apple feel about the DMA requirements?
The group already insisted in the DMA run-up to the fact that selling apps only via the in-house store was the better solution for users: this way they could be better protected against data theft and fraud. The company also now emphasizes that it sees apps from other sources as a potential security risk that must be contained. Therefore, they will also be checked to see whether they contain any false information about their functions. Authorities and some companies demanded assurances from Apple that they could stop app downloads from other marketplaces.
What happens if European users leave the EU?
According to Apple, the DMA innovations generally only apply to users whose profile is set to one of the EU countries and who are actually in the Union. If you leave the EU for shorter trips, everything will work unchanged. But if they leave for “too long,” they won’t be able to install new app marketplaces. Apps loaded from them should continue to run – but cannot be updated.
And what does it look like on Android smartphones?
Apps from other marketplaces have long been allowed to be downloaded onto phones with the Google Android operating system. However, Google has to adapt elsewhere: In the future, web search results from specialized search engines will be presented in more detail, for example for flights, hotels or shopping offers.
Who decides whether “gatekeepers” meet the DMA requirements?
The EU Commission does this, including with the help of market studies and statements from other companies. EU Competition Commissioner Margrethe Vestager said compliance with the DMA rules would be examined as a top priority. Shortly before the guidelines have to be applied, Vestager also pointed out that the $1.84 billion fine imposed on Apple in the dispute over its handling of music streaming services was largely intended as a “deterrent” to demonstrate the Commission’s determination . At the financial service Bloomberg, she emphasized that companies should not make their DMA implementation “unattractive” for their customers and users. Violations of the DMA result in penalties of up to 10 percent of annual sales – and up to 20 percent in the case of repeated violations. The last option is to break up the property. In the end, courts could decide on possible punishments.
