The European Commission has just published the list of “access controllers” subject to the famous DMA. Six companies and twenty-two services are affected by the new regulations, but others should soon follow.
The digital giants can tremble! On September 6, 2023, the European Commission unveiled the list of major tech companies that must comply with the Digital Markets Act (DMA), new legislation regulating digital markets, particularly in terms of competition and user safety. Suffice to say that this is not good news for the nominees, who have every interest in escaping this categorization and the legislative constraints it engenders.
Six companies are on the famous list of “gatekeepers” (gatekeepers): Alphabet (the parent company of Google), Amazon, Apple, Meta (‘Facebook, Instagram, Messenger and WhatsApp), Microsoft and ByteDance (the owner of TikTok). This concerns four social networks (TikTok, Instagram, Facebook, LinkedIn), three operating systems (Android, iOS, Windows), a search engine (Google), two browsers (Chrome, Safari) and two instant messengers (WhatsApp and Messenger). The list also includes six intermediation services (Google Maps, Google Play, App Store, Google Shopping, Amazon Marketplace and Meta Marketplace), the video sharing site YouTube as well as the advertising services of Google, Meta and Amazon. Companies now have six months, until March 6, to comply with the DMA. On the other hand, three services from Microsoft (the Edge browser, the Bing search engine and Microsoft Advertising) as well as two from Apple (iMesssage messaging and the iPadOS operating system) are the subject of additional research by the Commission, who will designate them or not later. Samsung, which had nevertheless indicated that it exceeded the thresholds indicated to be considered an access controller, is ultimately not concerned.
DMA: constraints for access controllers
The purpose of the DMA is to provide a better framework for digital companies, in particular GAFAMs, and their activities in the European Union, in order to prevent abuses due to their dominant position. Thus, it must make it possible to fight against anti-competitive practices, to prevent these companies from favoring their own services to the detriment of other market players, to encourage innovation and to better protect users and consumers (see our article ).
The scope of intervention of the new European legislation concerns the vast majority of digital services, including search engines, social networks, online video sharing platforms, operating systems – including connected televisions –, instant messaging, virtual assistants, online storage (cloud), web browsers, application stores, online advertising services and intermediation services – marketplaces, application stores, etc. The DMA targets what the Commission calls “access controllers”, i.e. companies that meet the following criteria:
- They provide one or more essential platform services in at least three European countries;
- Their annual turnover exceeds 7.5 billion dollars in the European Union where they have a market capitalization of at least €75 billion ;
- They have at least 45 million active users per month within the European Union.
Microsoft and Apple: exceptions for Bing and iMessage?
While companies have until March 2024 to comply with the DMA, failing which they will incur penalties of up to 10% of their total worldwide turnover – 20% in the event of a repeat violation –, negotiations are going well behind the scenes to know who will or will not appear on the famous list of “gatekeepers”. THE FinancialTimes revealed on September 5, before the list of services concerned was revealed, that Microsoft and Apple were trying everything for everything. While the Apple company has admitted to being an access controller for the vast majority of its products and services, it has fought to escape iMessage from European legislation, while the Redmond firm has sought to preserve its Bing search engine. Their argument? Their services would not be popular enough to meet the criteria set by the European Union.
While it is undeniable that Microsoft and Apple meet the first two criteria, one could wonder if Bing and iMessage had well over 45 million active users per month. Indeed, despite all its efforts to compete with Google by integrating more and more AI, Bing only represents 3% of the search engine market. Also, the Redmond firm argued that by complying with the same regulations as its rival, Bing would have no chance of surviving, since it would be at a great disadvantage compared to Google, whose use is much more widespread.
If we can understand Microsoft’s reasoning, it seems much more complicated for Apple to apply the same argument to iMessage. Indeed, it is pre-installed on all iPhones and mandatory for SMS management. However, if the firm does not communicate official figures, the Financial Times estimates that Apple accounts for 25% of smartphone sales in Europe, for a total market estimated at 200 million smartphones in 2021. This means that this year alone, the company would have sold some 50 million devices on the Old Continent. Suffice to say that we wonder how iMessage can have less than 45 million active users… The stakes are colossal for Apple, because if its instant messaging service is listed as gatekeeper, he would be forced to open it to the RCS (Register of Commerce and Companies). In short, everything it has been trying to avoid for many years, especially since these famous blue bubbles, as opposed to Android’s green bubbles, are a strong marker of differentiation, including social, compared to the competition. (see our article). Already the DMA forces it to open iOS to third-party application stores…
DMA: challenges from disgruntled access controllers
If, for the moment, only the App Store and iOS are affected by DMA, Apple said to itself “very concerned” by the new rules, believing that they pose problems for privacy and data security. “We will strive to mitigate these effects and continue to provide the best products and services to our European customers”the company told Reuters. Meta said it was evaluating the Commission’s designation, while Microsoft accepted its designation while welcoming further investigations by the Commission. Amazon has meanwhile announced that it is working with the European Commission to implement its plans.
For its part, Google said through Oliver Bethell that it was reviewing its designation and assessing the implications. “Our goal is to make changes that meet new requirements while protecting the user experience and providing useful, innovative and safe products to Europeans”he explains in a blog post. Same story at ByteDance, where the head of public policy for TikTok in Brussels, Caroline Greer, indicates that the company disagreed with the decision. “TikTok has brought choice into a space largely controlled by incumbents and this move risks undermining the DMA’s stated goal of protecting current operators from new competitors like TikTok”she said in a press release. “We are extremely disappointed that no market research was conducted prior to this decision and we are evaluating next steps.”
If they do not respect the prerogatives of the DMA, the companies concerned will be fined up to 10% of the annual worldwide turnover of the group concerned, and up to 20% in the event of a repeat offence! The European Commission may also impose periodic penalty payments of up to 5% of its total worldwide daily turnover. This represents tens of billions of euros for GAFAM! If the firm commits at least three violations over eight years, the Commission may open a market investigation and, if necessary, “impose behavioral or structural remedies”. Thus, it may prohibit him from buying other companies over a given period or force him to sell an activity (sale of units, assets, intellectual property rights or trademarks). This time, we’re not kidding!