New Digital Markets Act (DMA) Law

March 26, 2024

The European Union (EU) announced the launch of investigations into Apple, Alphabet, and Meta, marking the first probe under the new Digital Markets Act (DMA) tech legislation. The investigations aim to determine whether these tech giants have violated the DMA, which seeks to regulate the behavior of large technology companies and promote fair competition in the digital market.

Investigations into Apple and Alphabet

The first two probes focus on Alphabet and Apple, specifically targeting their anti-steering rules. Under the DMA, tech firms are prohibited from preventing businesses from informing their users about cheaper options for their products or subscriptions outside of an app store. The EU’s competition chief, Margrethe Vestager, stated that the way Apple and Alphabet have implemented the DMA rules on anti-steering appears to be at odds with the letter of the law, as they continue to charge various recurring fees and limit steering.

Apple’s Compliance with DMA Obligations

The third inquiry investigates whether Apple has complied with its DMA obligations to ensure that users can easily uninstall apps on iOS and change default settings. The probe also examines whether Apple is actively prompting users with choices to allow them to change default services on iOS, such as the web browser or search engine. The European Commission expressed concern that Apple’s measures, including the design of the web browser choice screen, may be preventing users from truly exercising their choice of services within the Apple ecosystem.

Alphabet’s Search Result Display

The fourth probe targets Alphabet, focusing on whether the firm’s display of Google search results may lead to self-preferencing of Google’s other services, such as Google Shopping, over similar rival offerings. Alphabet has stated that they have made significant changes to the way their services operate in Europe to comply with the DMA and will continue to defend their approach in the coming months.

Meta’s Pay and Consent Model

The fifth and final investigation focuses on Meta and its so-called pay and consent model. The commission is examining whether offering a subscription model without ads or requiring users to consent to terms and conditions for the free service violates the DMA. The European Commission is concerned that the binary choice imposed by Meta’s model may not provide a real alternative for users who do not consent, thereby failing to achieve the objective of preventing the accumulation of personal data by gatekeepers.

Potential Fines and Consequences

If any company is found to have infringed the DMA, the European Commission can impose fines of up to 10% of the tech firms’ total worldwide turnover. These penalties can increase to 20% in case of repeated infringement. The commission intends to conclude its probes within 12 months but has stressed that the DMA does not dictate a hard deadline for the timeline of the inquiry.

Important Facts for Exams

The Digital Markets Act (DMA) was proposed by the European Commission in December 2020 and entered into force on November 1, 2022.
The DMA aims to create a level playing field for businesses operating in the digital sector and to prevent large platforms from abusing their market power.
The term “gatekeepers” in the DMA refers to large tech firms that are required to comply with the legislation in the EU.
The European Commission is also looking into facts and information to clarify whether Amazon may be preferencing its own brand products on its e-commerce platform over rivals, as well as studying Apple’s new fee structure and other terms and conditions for alternative app stores.

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