The European Union released its first list of “gatekeeper” companies today. Five of them are American, one is Chinese, and zero of them are European. All have six months to “ensure full compliance” with the EU’s new Digital Markets Act, which will have significant consequences for 22 different services that those companies provide, including web search, social networking, messaging, operating systems, maps, and marketplaces.
The six gatekeepers are:
- Alphabet (Google)
- Amazon
- Apple
- ByteDance (TikTok)
- Meta (Facebook)
- Microsoft
The EU requires that all of these companies achieve compliance with the DMA within six months, which means they must allow third parties to interoperate with their services, share data with companies using their platforms, treat all services and products offered by third parties on their platforms equally alongside their own services, and much more. The platforms these companies own will not be able to prevent consumers using them from linking to businesses outside their platforms, must allow preinstalled software to be uninstalled, and can not track users activities outside of their services without “effective consent.”
The 22 core services that the EU has indicated must comply with the Digital Markets Act are:
- TikTok
- Facebook Messenger
- Google Maps
- Google Play
- Google Shopping
- Amazon Marketplace
- Apple’s App Store
- Meta Marketplace
- YouTube
- Google Search
- Chrome (browser)
- Safari (browser)
- Google Ads
- Amazon Ads
- Meta Ads
- Android
- iOS
- Windows
The Digital Markets Act will have significant impacts on services like the iOS App Store and Google Play, where smartphone owners get apps. It likely means Apple will need to enable third-party app stores. It also likely means that companies like Meta and TikTok that might combine on-platform data with acquired date in order to better target ads will have to stop doing that, or obtain consent. The Digital Markets Act will ensure that Amazon and other marketplaces won’t be able to prioritize their own in-house products over other vendors, and it should provide a pathway for third-party companies to use the gatekeeper platforms in equitable ways.
In short, the DMA is a powerful and far-reaching piece of legislation that will severely constrict how the mostly American technology companies will be able to operate in Europe.
Failure to comply has steep penalties:
- up to 10% of the company’s total worldwide annual turnover
- up to 20% in the event of repeated infringements
- up to 5% of the average daily turnover (in the case of periodic penalty payments)
- in case of repeated offenses, “non-financial remedies can be imposed,” the EU says, including “These can include behavioural and structural remedies, e.g. the divestiture of (parts of) a business”
Some called it anti-American, including Patrick Hedger, the Executive Director of the Washington, DC-based Taxpayers Protection Alliance, who called it a “shakedown” and pointed out that calling the launch day for the DMA “D-Day” could be particularly inappropriate.
Others called it a sad commentary on Europe’s home-grown tech ecosystem, saying that “no company even comes close to meeting the threshold of gatekeeper status.”
“And with regulations like this, no incentive for any EU company to aspire to be a real competitor to these six,” says Martijn Rasser, a manager director at Datenna. “Self-defeating move by Brussels.”
One thing is clear: the DMA will shake up the tech ecosystem significantly and cost American tech companies money, time, focus, and competitiveness. Whether it will improve the European tech ecosystem—or the lives of European consumers—is another question.
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