Author Topic: The EU’s new competition rules are going live  (Read 895 times)

Offline javajolt

  • Administrator
  • Hero Member
  • *****
  • Posts: 35500
  • Gender: Male
  • I Do Windows
    • windows10newsinfo.com
The EU’s new competition rules are going live
« on: March 13, 2024, 05:39:44 AM »
Here’s how tech giants are responding

The Digital Markets Act’s deadline for compliance is imminent. Its six designated ‘gatekeepers’ have fought the rules, but also bent to them.



March 6th marks a long-awaited moment of change: it’s the deadline for tech’s biggest “gatekeepers” to comply with the European Union’s Digital Markets Act, or DMA. The DMA requires powerful companies to allow more interoperability and avoid preferencing their own digital services. It’s generated disputes over which services should be included, sparked excitement among smaller competitors, and resulted in changes to how companies handle fundamental parts of their business. And in March 2024, after years of debate, the rules are coming into force.

The EU has designated six companies as gatekeepers, which it defines as large digital platforms providing “core” services like app stores, search engines, and web browsers. The DMA’s restrictions apply to specific services within these companies: Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. Here’s what each has been doing to meet — and fight — those demands.

What does the DMA require?

By March 6th, the six designated gatekeepers are required to comply with the DMA rules for the 22 covered services identified by the European Commission. By March 7th, those companies must submit compliance reports to the EU, explaining how they intend to stay in line with the rules. European officials will later evaluate those plans in workshops with each of the covered companies.

In general, designated platforms must take proactive steps that the EU believes will make digital markets more fair and open. For example, gatekeepers must let third-party companies interoperate with their services, they can’t favor their own products in rankings over competitors’, and they can’t condition app store access for outside developers on using their payments systems or other services.

What is a gatekeeper?

The European Commission presumes a platform is a gatekeeper if it meets two conditions.  First, it must have an annual EU revenue of at least €7.5 billion in each of the last three fiscal years or an average market cap of €75 billion in the last fiscal year, while providing its core platform to at least three EU member states. Second, it must operate a core platform with at least 45 million monthly active users in the EU and more than 10,000 yearly active EU business users in each of the last three fiscal years.

The commission identified specific services for each of the designated gatekeepers that it believes are subject to DMA rules. Gatekeepers that fail to comply with the rules can face fines of up to 10 percent of global revenue, and up to 20 percent for repeat infractions.

How is each gatekeeper responding?

Alphabet

Alphabet has a sprawling empire, stretching from a dominant search engine to a major web browser and popular mobile operating system, with many services interlinked to augment their power. That’s given it the widest range of covered services under the DMA:

   • Google Play

   • Google Maps

   • Google Shopping

   •Google Search

   • YouTube

   • The Android operating system

   • Alphabet’s online advertising system

   • Google Chrome

Consequently, the company announced a variety of changes in January and March, affecting everything from data sharing to search results for EU users. The highlights include:

   • Choice screens — one for picking a default browser on Android devices and one for picking a
      default search engine in the cross-platform Chrome browser — coming to the European
      Economic Area (EEA) after March 6th.

   • More links to competing sites when searching Google for things like flights and hotels,
      including a dedicated space for comparison sites. Google will also remove some of its own
      widgets, like the Google Flights box.

   • An opt-out for sharing some data across YouTube, Search, ad services, Google Play, Chrome,
      Google Shopping, and Google Maps. Users’ choices will take effect on March 6th.

   • A new Data Portability API for developers to build on its Google Takeout service, which lets
      users move data out of Google services.

   • The option for Play Store app developers to direct users in the EEA outside their apps to
      promote alternate payment offers, part of a larger overhaul of Android payments in Europe.

The company is a long-standing target of EU antitrust attacks, and some of these changes echo earlier concessions. Chrome on Android already offered search engine choice screens, for instance, after a previous legal spat.

Alphabet’s proposed changes have displeased certain competitors, particularly smaller, specialized search platforms. Online reviews platform Yelp recently claimed the search changes not only “violate the DMA’s prohibition against self-preferencing, they actually increase the rate at which users will remain within Google’s walled garden.” Megan Gray, former counsel for rival search engine DuckDuckGo, has questioned the entire concept of choice screens as an effective vehicle for promoting competition. And Epic CEO Tim Sweeney, whose company is suing Google for antitrust violations in the US, has objected strenuously to its Android payment framework. So we probably haven’t seen the end of questions over Alphabet’s dominance — but it’s staked out its starting ground.

Apple

Apple is one of the highest-profile DMA targets, thanks to its expansive mobile walled garden. The iOS operating system, Safari web browser, and App Store are all designated as “core platform services,” and much of the conversation has centered on how far it will have to open them up.

On January 25th, the company announced that it would be introducing several changes in the iOS 17.4 update to abide by the EU’s new rules, which include:

   • Allowing iOS apps to be distributed via third-party marketplaces, eroding the Apple App
      Store’s monopoly over iPhone apps.

   • A new framework and APIs allowing third-party marketplace developers to manage app
      installations and updates.

   • Support for third-party browser engines that aren’t built around WebKit, the engine that
      underpins Apple’s own Safari browser, and a new prompt screen encouraging iOS users to
      choose a default browser.

   • Opening up the iPhone’s NFC systems to allow using contactless payment services besides
      Apple Pay in banking and wallet apps.

That isn’t to say these changes are being made willingly. Apple has fiercely contested its services falling under the DMA, arguing that it actually runs five separate App Stores (which would be conveniently small enough to avoid the EU regulation) instead of a single platform. While that gambit wasn’t successful, it did convince the EU commission that iMessage doesn’t qualify as gatekeeper service, avoiding requirements to make it interoperable with other messaging platforms.

The changes rolling out for European users in iOS 17.4, particularly support for third-party app stores, are intended to address long-standing complaints about Apple’s walled-off ecosystem. But numerous developers and critics have described them as insufficient or even “malicious compliance.” Apple’s new rules would require App Store alternatives to either pay a €0.50 (~54 cents USD) Core Technology Fee for apps with over 1 million downloads or stick to the 15 to 30 percent cut the company currently takes.

Given that, companies haven’t exactly lined up to accept Apple’s offer. Although Epic announced one, it has since had its developer account banned. Other third-party app marketplaces have been announced by MacPaw and Mobivention, but only the latter claims it’ll be available for iOS users on March 7th, right after the DMA takes effect. Similarly, while rival web browser providers like Google and Mozilla are seemingly experimenting with new iOS browsers, neither company has officially announced when those apps will be available.

Meta

Facebook operator Meta has a long history of absorbing rival social networks and messaging services, as well as a powerful ad platform. The services covered by the DMA are concentrated in these areas:

   • Facebook Marketplace

   • Facebook

   • Instagram

   • WhatsApp

   • Messenger

   • Meta Ads

Targeted advertising is Meta’s bread and butter, and last year it aimed to address concerns by letting users pay to avoid ads — launching a €9.99 per month ad-free tier for Facebook and Instagram, then giving the tier (as of March 1st) an extra fee for linked accounts. It also paused ads for users younger than 18, although its long-term plans there are less clear.

The choice to lean on a paid option resulted in a lawsuit from the European Consumer Organisation (BEUC), which claimed the “very high subscription fee” meant users “do not have a real choice.” In January, Meta announced the gradual rollout of some other data protection features, including the ability to sever linked Facebook and Instagram accounts and manage them separately.

But the most exciting change for many people is the prospect of third-party cross-platform messaging, which Meta announced for its WhatsApp service last year. On March 6th, Meta explained how it will maintain end-to-end encryption in WhatsApp and Messenger while warning that it can’t guarantee that other services’ apps will be good stewards of its users’ messages. There’s still no firm timeline for when users will get third-party chats, though.

These changes are in the works despite Meta appealing some pieces of its gatekeeper designation. In November, it argued that Messenger and Marketplace didn’t belong on the list, saying the former was an integrated Facebook feature and the latter a consumer-to-consumer service where Meta doesn’t act as an intermediary. As of this week’s deadline, the challenge remains ongoing.

Amazon

Amazon’s retail powerhouse is built on a complex data collection system and huge third-party marketplace, which some sellers complain has given it an unfair leg up. It has two services that fall under the DMA: its online marketplace and its advertising business.

The e-commerce giant has outlined some of the changes it’s making to the way businesses manage their ads, as well as customers’ control over them. It’s already started asking customers who visit its EU store for permission to collect their information for personalized ads. As noted on this support page, accepting or denying these terms will affect Amazon’s ability to collect information across its entertainment services, including Amazon Prime Video, IMDb, and Twitch, as well as on its smart home devices, Kindle e-readers, app stores, operating systems, and Fire tablets. That could make it harder for Amazon to sell and surface personalized ads for users in the EU.

Additionally, Amazon has committed to giving advertisers and publishers with campaigns in the EU “new, expanded reports” that they can access from Amazon’s website. These reports contain more detailed information on how much an advertiser is paying for ads, as well as how much a publisher receives from ads displayed on a third-party website or app. The company is also rolling out a new “clean room” for advertisers with campaigns in the EU, allowing them to “independently verify the success and impact of their campaigns in a privacy-safe, cloud-based environment.”

What Amazon hasn’t detailed yet, though, is what kind of changes — if any — it’s making to ensure its marketplace fosters competition under the DMA. The rules could mean the company can’t give its brands preferential treatment in search results or copy products from third-party sellers, both of which Amazon has been accused of in the past. And Amazon has long been the subject of antitrust scrutiny in the EU, where regulators accused it of misusing seller data to get ahead of the competition. The company settled these charges in 2022 and promised to stop using non-public data, as well as make it easier for more sellers to appear within its “Featured Offer” box (formerly called the “Buy Box”), where products get high visibility.

Microsoft

Microsoft’s Windows operating system falls under the DMA’s regulations, and that’s changing how much the company promotes — or lets users avoid — numerous other apps and services inside it.

The software giant has had to make a range of changes to comply, including adding the ability to disable its built-in Bing web search, offering a new option to uninstall its Edge browser, and even allowing companies like Google to add their own custom web searches into Windows. These options are available to users in EEA markets — which includes the EU countries and also Iceland, Liechtenstein, and Norway.

Microsoft will allow Windows machines in EEA markets to remove Bing results from Windows Search, so Google could potentially list its own search results here instead. Third parties like Google will also be able to add feeds into the Windows Widget board. As part of the DMA rules to make it easier to uninstall preinstalled apps, Windows 11 users will also be able to uninstall the Camera, Cortana, and Photos apps.

All of these changes have already been rolling out to machines in the EEA, getting Microsoft ready for compliance day. We’re now waiting to see if Google decides to release its own add-in for Google search results in the Windows Search interface. There could potentially be a number of Windows Widgets providers soon, too.

The EU initially listed a number of other Microsoft tools as gatekeeper services. But Microsoft successfully appealed to have Edge, Bing, and Microsoft Advertising spared from the DMA, after regulators agreed with Microsoft’s argument that these services don’t qualify — Microsoft argues they in fact “operate as challengers in the market.”

ByteDance

Chinese giant ByteDance is the only non-US company designated as a gatekeeper under the DMA so far, and it’s got only one covered service: the social network TikTok.

ByteDance shared how TikTok plans to comply with the DMA earlier this week. The platform launched an API that will let European users transfer their data to other apps that have registered with TikTok to use the tool. Registered developers can port posts, followers, and other activity from TikTok to their own apps with users’ permission. TikTok said it’s also improved its “Download your Data” tool that lets individual users export and download their posts and other information. And it will have “enhanced data portability solutions” for business accounts.

But these changes are being made while the company appeals its designation as a gatekeeper, claiming that on the contrary, TikTok “is arguably the most capable challenger to more entrenched platform businesses.” It argues that the Commission based its analysis on ByteDance’s global market cap, which the company says reflects business lines that don’t even operate in Europe, and that TikTok itself does not meet the necessary revenue threshold.

ByteDance’s inclusion has a unique political dimension here, cutting against some critics’ arguments that the EU is unfairly targeting American companies. (A second non-US-based company, Samsung, was initially named but later removed from the gatekeeper list.) California Democrat Lou Correa, the ranking member on the US House Judiciary subcommittee on antitrust, led a letter late last year with more than 20 bipartisan colleagues, criticizing the “clear targeting of U.S. companies by EU policies, especially under the DMA.” The lawmakers critiqued the fact that the European Commission didn’t name Chinese firms like Huawei, Tencent, and Alibaba gatekeepers “despite the fact that they are competing aggressively with U.S. firms in the EU and other markets.”

Update March 6th, 2024, 2:05PM ET: Updated Apple and Meta sections to reflect current news.

source