Brussels, San Francisco On Thursday evening, a handful of politicians will gather in a modest Brussels boardroom to define new rules for the world’s largest corporations. Lobbyists have been trying to water down the law for around two and a half years, but only the final details still need to be smoothed out. If nothing else goes wrong, and it doesn’t look like it, the “Digital Markets Act” (DMA) will intervene deeply in the way in which big money is made on the Internet from next year.
With a certain number of users and a certain annual turnover, around 7.5 billion euros are under discussion, companies are defined as “gatekeepers”. And they have to align their platforms in such a way that they correspond to Brussels’ ideas of fair competition. To do this, they must above all open up their services more to other providers.
The groups affected will include at least Apple, Amazon, Microsoft, Google and Meta. Booking.com and Tiktok will probably also be among them, as well as Alibaba and Zalando if they continue to grow.
How threatening the law is for the corporations is shown by the methods they used to fight it. Members of the European Parliament report on studies and entire institutes that are being set up to create a mood against the DMA. It warns of unusable products for users, security problems with cell phones and damage to the economy in general.
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According to their name, the institutes advocate the interests of start-ups and medium-sized companies. Among the members are also the large digital groups.
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They did not find a real advocate in European politics. Despite all the arguments about the details of the law, there was no question that the tech companies needed tough conditions.
For Apple, it was the app store to defend. This made almost 650 billion dollars in sales in 2021. Apple earns a share of the majority of the transactions – up to 30 percent. The DMA will undermine the business model. Apple should be forced to allow other payment providers.
Corporations should no longer define the rules
And that’s not all: users should be able to install programs on their iPhone without going through 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 cracking.
Apple therefore warns of “attacks by malicious actors on security, privacy and personal data”. The legislators consider such warnings to be exaggerated. After all, users still have the option of relying solely on Apple programs. “The corporations have never constructively tried to make changes to the DMA. They always 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 Apple example shows what the DMA is about: The EU no longer wants to leave it up to the corporations to define the competition rules. Too many companies are dependent on the big internet platforms. An app developer won’t get very far without Apple’s goodwill.
An online retailer must be able to rely on their goods being 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 pre-installed on all Android cell phones. It is particularly dramatic in the advertising business, where Google and Facebook have divided up large parts of the market and define the conditions.
For many years, the EU Commission has been trying to get rid of such behavior. 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 got the impression that such sums are taken into account from the outset.
Zalando is also fighting back
The German online fashion retailer Zalando is also resisting 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 like Booking.com. The market shares are too small.
The fact that both companies are now still the focus of the DMA also has a political reason: the USA had criticized that some drafts should only affect US companies.
In the USA itself, attempts to regulate digital companies more strictly have not been successful so far. All the more you 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 proudly speak of the “Brussels Effect”, which was recently observed with the General Data Protection Regulation (GDPR). Kai Westerwelle from the US law firm Bird & Bird confirms that this has influenced legislation in the USA. “Initially largely dismissed 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 reacts, American users could benefit from the DMA. Microsoft announced in February that it wants to treat users of its app stores better on computers and game consoles. Anyone who offers a program there or buys one can now do so without Microsoft making any money.
The company also guarantees not to favor its own apps in placement. Microsoft already fulfills many of the DMA requirements – and not just in Europe, but worldwide.
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