March 6th signifies a highly anticipated moment of transformation: the deadline for major tech "gatekeepers" to comply with the European Union's Digital Markets Act (DMA). The DMA mandates that influential companies foster greater interoperability and refrain from favoring their proprietary digital services. This directive has triggered debates on service inclusions, stirred enthusiasm among smaller competitors, and prompted alterations in how companies manage essential aspects of their operations. As of March 2024, after years of deliberation, these regulations are officially taking effect.

The EU has identified six companies as gatekeepers, defining them as significant digital platforms providing "core" services such as app stores, search engines, and web browsers. The DMA's constraints specifically target certain services within these entities: Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft. The following outlines the efforts and challenges each company has encountered in adhering to or contesting these demands.

What does the DMA require?

As of March 6th, the six designated gatekeepers are mandated to adhere to the rules outlined in the Digital Markets Act (DMA) for the 22 covered services identified by the European Commission. Subsequently, by March 7th, these companies are required to submit compliance reports to the EU, detailing their strategies for aligning with the regulations. European officials will then assess these plans through workshops conducted with each of the covered companies.

Broadly, the designated platforms are obligated to take proactive measures that the EU believes will foster fairness and openness in digital markets. Specific requirements include enabling third-party companies to interoperate with their services, refraining from favoring their products in rankings over competitors', and avoiding the imposition of conditions on app store access for external developers related to the use of their payment systems or other services.

What is a gatekeeper?

The European Commission establishes criteria for identifying a platform as a gatekeeper, relying on two key conditions. Firstly, it must exhibit an annual EU revenue of at least €7.5 billion in each of the past three fiscal years or maintain an average market capitalization of €75 billion in the last fiscal year, while providing its core platform to a minimum of three EU member states. Secondly, the platform must operate a core platform with at least 45 million monthly active users in the EU and boast more than 10,000 yearly active EU business users in each of the preceding three fiscal years.

For each designated gatekeeper, the commission has outlined specific services believed to be subject to DMA rules. Failure to comply with these rules may result in fines of up to 10 percent of global revenue, with the potential for an increase to 20 percent for repeated violations.

How is each gatekeeper responding?

Alphabet

Alphabet boasts an extensive empire, spanning a dominant search engine, a major web browser, and a popular mobile operating system, with a network of interconnected services enhancing its influence. This diversity has granted Alphabet the broadest array of covered services under the Digital Markets Act (DMA), including Google Play, Google Maps, Google Shopping, Google Search, YouTube, the Android operating system, Alphabet’s online advertising system, and Google Chrome.

In response to the DMA regulations, Alphabet has unveiled several changes in both January and March, impacting various aspects from data sharing to search results for EU users. Key highlights encompass the introduction of choice screens in the European Economic Area (EEA) for selecting default browsers on Android devices and default search engines in the cross-platform Chrome browser after March 6th. Additionally:

1. More links to competing sites, particularly for searches related to flights and hotels, with a dedicated space for comparison sites. Google will also remove some of its proprietary widgets, such as the Google Flights box.
2. An opt-out feature allowing users to control the sharing of certain data across YouTube, Search, ad services, Google Play, Chrome, Google Shopping, and Google Maps, with users' choices taking effect on March 6th.
3. Introduction of a new Data Portability API, enabling developers to leverage Google Takeout services for users to move their data out of Google services.
4. Play Store app developers in the EEA will have the option to redirect users outside their apps to promote alternative payment offers, aligning with broader Android payments overhaul in Europe.

Alphabet has been a consistent target of EU antitrust scrutiny, and some of these changes mirror concessions made in response to previous legal challenges, such as the inclusion of search engine choice screens in Chrome on Android.

Alphabet's proposed changes have sparked dissatisfaction among certain competitors, particularly smaller, specialized search platforms. Yelp, an online reviews platform, has contended that the search modifications not only "violate the DMA's prohibition against self-preferencing but they actually increase the rate at which users will remain within Google's walled garden." Megan Gray, former counsel for rival search engine DuckDuckGo, has raised skepticism about the effectiveness of choice screens as a means to promote competition. Epic CEO Tim Sweeney, whose company is engaged in an antitrust lawsuit against Google in the US, has strongly objected to its Android payment framework. This suggests that questions surrounding Alphabet's dominance are likely to persist, as the company establishes its initial stance amidst ongoing scrutiny.

Apple

Apple stands out as one of the prime targets under the Digital Markets Act (DMA), given its extensive mobile ecosystem. The iOS operating system, Safari web browser, and App Store are all categorized as "core platform services," sparking discussions on the extent to which Apple will open them up.

In response to the new rules, Apple announced several changes in the iOS 17.4 update on January 25th, aiming to comply with the EU's regulations. These changes include:

1. Allowing iOS apps to be distributed via third-party marketplaces, challenging the Apple App Store's monopoly over iPhone apps.
2. Introducing a new framework and APIs to enable third-party marketplace developers to manage app installations and updates.
3. Supporting third-party browser engines not based on WebKit (the engine underpinning Apple's Safari browser), along with a new prompt screen encouraging iOS users to choose a default browser.
4. Opening up the iPhone's NFC systems to permit the use of contactless payment services besides Apple Pay in banking and wallet apps.

Despite these adjustments, Apple has vigorously contested its services falling under the DMA, arguing that it operates five separate App Stores instead of a single platform. While this argument wasn't successful, it convinced the EU commission that iMessage doesn't qualify as a gatekeeper service, exempting it from interoperability requirements with other messaging platforms.

The changes introduced in iOS 17.4 for European users, especially support for third-party app stores, aim to address long-standing complaints about Apple's closed ecosystem. However, many developers and critics view these changes as insufficient or even as "malicious compliance." Apple's new rules require App Store alternatives to pay a €0.50 (~54 cents USD) Core Technology Fee for apps with over 1 million downloads or adhere to the 15 to 30 percent cut currently imposed by the company.

Despite Apple's offer, few companies have embraced it. While some third-party app marketplaces have been announced by Epic, MacPaw, and Mobivention, only the latter claims availability for iOS users on March 7th, right after the DMA takes effect. Additionally, although rivals like Google and Mozilla seem to be experimenting with new iOS browsers, no official announcements regarding the availability of these apps have been made.

Meta

Meta, the operator of Facebook, has a history of assimilating rival social networks and messaging services, coupled with a robust ad platform. The services covered by the Digital Markets Act (DMA) are primarily concentrated in these domains:

1. Facebook Marketplace
2. Facebook
3. Instagram
4. WhatsApp
5. Messenger
6. Meta Ads

Targeted advertising is a core element of Meta's operations, and in response to concerns, the company introduced a paid option allowing users to avoid ads. This involved the launch of a €9.99 per month ad-free tier for Facebook and Instagram, with an additional fee for linked accounts introduced as of March 1st. Meta also temporarily halted ads for users under 18, although its long-term plans in this regard remain unclear.

The decision to rely on a paid option led to a lawsuit from the European Consumer Organisation (BEUC), claiming that the "very high subscription fee" limits users' choices. In January, Meta announced the gradual rollout of additional data protection features, including the ability to sever linked Facebook and Instagram accounts and manage them separately.

One significant change anticipated by many users is the potential for third-party cross-platform messaging, particularly for Meta's WhatsApp service. Despite Meta appealing some aspects of its gatekeeper designation, such as arguing that Messenger and Marketplace should not be on the list, the company has been working on these changes. In November, Meta challenged the inclusion of Messenger and Marketplace, stating that Messenger was an integrated Facebook feature and Marketplace was a consumer-to-consumer service where Meta doesn't act as an intermediary. As of the current deadline, this challenge is still ongoing.

Amazon

Amazon, a retail giant with a robust data collection system and a substantial third-party marketplace, has two services falling under the Digital Markets Act (DMA): its online marketplace and its advertising business. While the company has outlined changes to the management of ads and customer control over them, it has yet to provide details on how it plans to ensure marketplace competition under the DMA.

Some of the changes Amazon has disclosed include:

1. Requesting permission from customers visiting its EU store to collect information for personalized ads, affecting its ability to collect information across various services and devices.
2. Committing to provide advertisers and publishers with campaigns in the EU with new, expanded reports, offering more detailed information on ad costs and publisher earnings.
3. Introducing a new "clean room" for advertisers in the EU, allowing independent verification of the success and impact of their campaigns in a privacy-safe, cloud-based environment.

However, Amazon has not specified the changes, if any, it will implement to ensure marketplace competition under the DMA. The rules may restrict the company from giving preferential treatment to its brands in search results or copying products from third-party sellers, actions Amazon has faced accusations of in the past. The company has been under EU antitrust scrutiny, with regulators accusing it of misusing seller data. In 2022, Amazon settled these charges, pledging to cease the use of non-public data and making it easier for more sellers to appear in its "Featured Offer" box, previously known as the "Buy Box," where products gain high visibility.

Microsoft

Microsoft's Windows operating system falls within the regulations of the Digital Markets Act (DMA), resulting in changes that impact the promotion and user control of various apps and services within the system.

To comply with DMA regulations, Microsoft has implemented several changes, including:

1. Adding the option to disable the built-in Bing web search.
2. Providing a new option to uninstall its Edge browser.
3. Allowing companies like Google to incorporate their custom web searches into Windows.

These options are available to users in the European Economic Area (EEA), encompassing EU countries as well as Iceland, Liechtenstein, and Norway.

Specific changes include the ability to remove Bing results from Windows Search in EEA markets, enabling third parties like Google to add feeds into the Windows Widget board. As part of the DMA rules facilitating the uninstallation of preinstalled apps, Windows 11 users in EEA markets can uninstall the Camera, Cortana, and Photos apps.

These changes have been progressively rolled out to machines in the EEA, aligning Microsoft with compliance requirements. The focus now shifts to potential initiatives from companies like Google to introduce their search results in the Windows Search interface, along with the possibility of multiple Windows Widgets providers.

While initially listing other Microsoft tools as gatekeeper services, the EU ultimately spared Edge, Bing, and Microsoft Advertising from the DMA following Microsoft's successful appeal. Regulators agreed with Microsoft's argument that these services don't qualify, as the company contends they "operate as challengers in the market."

ByteDance

Chinese company ByteDance stands out as the only non-US company designated as a gatekeeper under the Digital Markets Act (DMA), with its social network TikTok being the covered service. ByteDance has outlined how TikTok plans to comply with the DMA, introducing an API that enables European users to transfer their data to other apps registered with TikTok. This tool allows registered developers to import posts, followers, and other activities from TikTok to their own apps with user consent. TikTok has also enhanced its "Download your Data" tool for individual users to export and download their posts and other information, along with providing "enhanced data portability solutions" for business accounts.

However, ByteDance is appealing its gatekeeper designation, arguing that TikTok is a formidable challenger to entrenched platform businesses and claiming that the Commission's analysis was based on ByteDance's global market cap, reflecting business lines that don't operate in Europe. According to ByteDance, TikTok itself does not meet the necessary revenue threshold.

The inclusion of ByteDance adds a unique political dimension, challenging critics who argue that the EU unfairly targets American companies. California Democrat Lou Correa, the ranking member on the US House Judiciary subcommittee on antitrust, led a bipartisan letter criticizing the "clear targeting of U.S. companies by EU policies, especially under the DMA." Lawmakers expressed concern that Chinese firms like Huawei, Tencent, and Alibaba were not named gatekeepers despite aggressive competition with US firms in the EU and other markets.