Brussels, San Francisco On Thursday evening, a handful of politicians will gather in a simple boardroom in Brussels to define new rules for the world’s largest corporations. For about two and a half years, lobbyists have been trying to water down the law, but only the last details have to be smoothed out. If nothing goes wrong anymore, and it doesn’t look like it, the “Digital Markets Act” (DMA) from next year will have a profound impact on the way big money is made on the Internet.
With certain user numbers and with a certain annual turnover, around 7.5 billion euros are being discussed, companies are defined as “gatekeepers”. And they have to align their platforms in such a way that they correspond to the Brussels ideas of fair competition. To do this, you need to open your services more to other providers.
The affected companies will include at least Apple, Amazon, Microsoft, Google and Meta. Also Booking.com and Tiktok will probably be among them, if they continue to grow so will Alibaba and Zalando.
How threatening the law is for the corporations can be seen from the methods they have used to fight it. Members of the European Parliament report on studies and entire institutes that are being created to create a mood against the DMA. It warns of unusable products for users, of security problems with mobile phones and of damage to the economy in general.
According to the name, the institutes are committed to the interests of start-ups and medium-sized companies. Among the members, however, are also the large digital corporations.
They did not find a real advocate in European politics. For all the wrangling over the details of the law, it has not been questioned that the tech companies need tough regulations.
For Apple, it was the app store that should be defended. It generated almost $650 billion in revenue in 2021, with Apple making up to 30 percent of the majority of transactions. The DMA will undermine the business model. Apple should be forced to allow other payment providers.
Corporations should no longer define the rules
And not only that: users should be able to install programs on their iPhone past the official app store. So Apple will have significantly less control over what happens on the phones. The hermetically sealed ecosystem of the iPhone world is getting cracks.
Apple warns of “attacks by malicious actors on security, privacy and personal data”. Lawmakers consider such warnings to be excessive. After all, users still have the opportunity to rely solely on Apple programs. “The companies have never tried to make any constructive changes to the DMA. They always just wanted to bring him down,“ says Andreas Schwab (CDU), who drafted the law for the European Parliament. “Their goal is to further increase their market power, and we will not allow that.“
The example of Apple shows what the DMA is about: the EU no longer wants to leave it to the corporations to define the competition rules. Too many companies are dependent on the big Internet platforms. Without the goodwill of Apple, an app developer will not get far.
An online retailer must be able to rely on the fact that his goods are also displayed on Amazon. The providers of search engines and e-mail services have little chance of success as long as the corresponding Google products are already preinstalled on all Android phones. It is particularly dramatic in the advertising business, where Google and Facebook have divided large parts of the market among themselves and are defining the conditions.
For many years, the EU Commission has been trying to combat such behaviour. She has repeatedly initiated lengthy antitrust proceedings and then argued with the corporations in court. It has already imposed fines of around 10 billion euros on Google alone, for example, because it preferred its own price comparison in the search engine. In Brussels, one had the impression more and more that such sums were calculated from the outset.
Zalando is also fighting back
The German online fashion retailer Zalando is also fighting against the law. Under the DMA, the Dax Group would have to place offers from third-party providers just as prominently on its website as its own. The company does not see itself as a “gatekeeper”, just as Booking.com . The market shares are too small.
There is also a political reason that both companies are now in the focus of the DMA: The US had criticized that in some drafts only US companies should be taken.
In the USA itself, attempts to regulate digital companies more strictly have not been successful so far. This makes it all the more difficult to look at the laws in Europe from there. It would not be the first time that an EU law has been copied.
In Brussels, people are proudly talking about the “Brussels effect”, which was last observed with the General Data Protection Regulation (GDPR). This has influenced legislation in the USA, confirms Kai Westerwelle from the US law firm Bird & Bird. “Initially largely rejected as EU protectionism, essential parts of the GDPR are now the cornerstone of a rapidly increasing number of new data protection laws in many US states.“
And even before Congress responds, American users could benefit from the DMA. For example, Microsoft announced in February that it wants to better treat users of its app stores on computers and game consoles. Anyone who offers a program there or buys one can now do so without Microsoft earning from it.
The company also guarantees not to give preference to its own apps when placing. Microsoft is already fulfilling many of the requirements of the DMA – and not only in Europe, but worldwide.
