EU Announces Six Tech Companies to be Regulated Under New Competition Rules
The European Union has officially identified the initial six tech “gatekeepers” that will be required to comply with stringent regulations outlined in the Digital Markets Act (DMA). These companies are well-known and include Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. The European Commission (EC), the executive body of the EU, has clarified that Samsung has not yet been classified as a gatekeeper after evaluating criteria such as revenue, valuation, and user base.
The EC stipulates that digital platforms can be designated as gatekeepers “if they provide an important gateway between businesses and consumers in relation to core platform services”. Gatekeepers now have until March 2024 to ensure that their applicable services comply with the DMA regulations. Among the six companies, EY has named 22 core platform services to which the law applies:
- Alphabet: Google Ads, Google Search, Android, YouTube, Chrome, Google Maps, Google Play and Google Shopping
- Amazon: Amazon Marketplace and Amazon Ads
- Apple: iOS, App Store and Safari
- ByteDance: TikTok
- Meta: Facebook, Instagram, WhatsApp, Messenger, Meta Marketplace and Meta Ads
- Microsoft: LinkedIn and Windows
According to the DMA, gatekeepers cannot favor their own services over competitors’ offerings and cannot keep users locked into their own ecosystems. They must also allow third parties to operate with their services in certain situations.
Microsoft and Apple have argued that despite Bing, Edge, Microsoft Advertising and iMessage exceeding the thresholds set by the EC, they do not qualify as gateways and do not need to comply with the DMA. In each case, the EC has launched a market investigation to verify the companies’ claims.
Meanwhile, the EC states that iPadOS does not meet the thresholds, but has launched a market study to determine whether it should be designated as a core platform service. Gmail, Outlook.com and Samsung Internet Browser met the thresholds, but their owners (Alphabet, Microsoft and Samsung) successfully convinced the EC that none of these services were suitable as gateways to core platform services.
The rules are likely to have a big impact on Apple in particular. The company has tried to keep a firewall around the iOS ecosystem despite attempts by jailbreakers to download apps to the iPhone over the years. Earlier reports indicated that Apple is set to allow third-party app stores and sideloading in iOS 17 — we’ll learn more about that next week when the company holds its fall iPhone event. Microsoft (especially Xbox) and Epic Games are among the companies preparing their own mobile app stores as the wall around the iOS garden crumbles.
Apple has also so far rebuffed Google’s (slightly awkward) efforts to get it to support the RCS messaging standard. The former understands well the value of iMessage and blue text bubbles. However, if the EC designates iMessage as a gateway, Apple may have to play nice with RCS and other messaging services.
To that end, Apple told Reuters that it is concerned about privacy and security risks that DMA compatibility could pose. “We are focused on how to mitigate these impacts and continue to deliver the best products and services to our European customers,” the company said.
Failure of the gatekeeper to follow the DMA rules can have serious consequences. The EC can fine the offending gatekeeper up to 10 percent of its global turnover. It can rise to 20 percent if the gatekeeper continues to break the rules. The EC has also given itself the power to force the gatekeeper to sell the company and prevent it from buying related services in systematic DMA violations.
