The EU announced investigations into Google, Meta and Apple for potential violations of the Digital Markets Act (DMA).
If any of the tech giants are found in breach of the DMA, each could face fines of up to 10% of their annual turnover.
What is the Digital Markets Act (DMA)? The DMA is a new law designed to ensure that large online platforms, called “gatekeepers”, behave fairly online to create a fair and open environment for online businesses. Only six companies have obligations under the DMA:
Alphabet (parent company of Google). apple Goal. Amazon. Microsoft. ByteDance.
The six companies, none of which are based in the EU, had to ensure they were fully compliant with the DMA obligations and had to submit compliance reports by March 7.
Penalties for violation of DMA. The consequences of breaching the DMA include:
Fines: up to 10% of the company’s total annual turnover worldwide, or up to 20% for repeated violations. Periodic penalties: up to 5% of a company’s average daily turnover. Remedies: May include behavioral and structural remedies, such as divestment of (parts of) a company.
under investigation. EU antitrust chief Margrethe Vestager and industry chief Thierry Breton confirmed that investigations have been launched into five possible DMA breaches:
It has been reported that Apple does not allow apps to openly communicate with and enter into contracts with users. Allegedly, Google does not allow apps to communicate freely with users and enter into contracts with them. Apple doesn’t offer enough options to users. Meta allegedly unfairly asks people to pay to prevent their data from being used for ads. It has been reported that Google gives its own preferences for goods and services in its SERPs.
The investigations are expected to last around 12 months.
Why we care Tougher data privacy policies may affect Google’s ability to deliver personalized ads and content. This could reduce the effectiveness of advertising campaigns, as they may not effectively reach the desired target audience with precision.
App Store Concerns. The Commission is investigating whether Google and Apple have breached DMA rules on their app stores. Pursuant to Article 5(4) of the DMA, the gatekeepers (the six companies to which the DMA applies) must allow app developers to direct users to offers outside of their app stores. ‘applications at no cost. The Commission is concerned that Google and Apple are not fully following this rule. Its measures appear to limit the freedom of developers to advertise and promote offers. They also impose fees, making it difficult for developers to communicate and make deals directly.
Concerns of self-preference. The Commission is investigating Alphabet to see whether Google’s search results favor Alphabet’s own services such as Google Shopping, Google Flights and Google Hotels over similar rival services. They are concerned that Alphabet’s actions to comply with the DMA do not ensure fair treatment for third-party services listed on Google’s search results page compared to Alphabet’s own services, as required by the Article 6(5) of the DMA.
Obligations of the user’s choice. The Commission is concerned that Apple’s measures, including the design of the web browser’s choice screen, may make it difficult for users to actually exercise their choice of services within the Apple ecosystem, which contrary to Article 6(3) of the DMA.
Payment Model or Meta Consent. The Commission is concerned that Meta’s “pay or consent” model, which offers users a binary choice, does not provide a genuine alternative if users choose not to consent. Consequently, this may not achieve the goal of preventing custodians from accumulating personal data.
What the EU says. EU antitrust chief Vestager said:
“We suspect that the solutions suggested by the three companies do not fully comply with the DMA.” “We will now investigate companies’ compliance with the DMA, to ensure open and contestable digital markets in Europe.”
Industry boss Breton added:
“We have been discussing with the guardians for months to help them adapt, and we already see the changes that are happening in the market. But we are not convinced that the solutions of Alphabet, Apple and Meta respect their obligations for a fairer and more open digital space for European citizens and businesses”. “Should our investigation conclude that there is not full compliance with the DMA, the gatekeepers could face heavy fines.”
What Google says. Oliver Bethell, Google’s competition executive, said in one statement:
“To comply with the Digital Markets Act, we have made significant changes to the way our services work in Europe.” “We have engaged with the European Commission, stakeholders and third parties at dozens of events over the past year to receive and respond to feedback and to balance conflicting needs within the ecosystem. We will continue to advocate for our approach in the coming months”.
What Meta says. Meta said in a statement:
“Meta said: “Subscriptions as an alternative to advertising are a well-established business model in many industries. . . We will continue to engage constructively with the Commission.”
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