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The EU is wasting absolutely no time in making sure Big Tech companies are complying with its new Digital Markets Act (DMA) law.
On Monday, the European Commission announced that it was opening non-compliance investigations into three companies defined as “gatekeepers” under the new regulations: Apple, Meta, and Google’s parent company Alphabet.
“Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s ‘pay or consent model’,” said the European Commission in a statement. “The Commission suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA.”
Here’s why the EU is investigating Meta, Apple, and Alphabet
The main purpose of the DMA is to force these “gatekeeper” companies to open up its core platforms in order to spur competition from third parties so the investigations are all into Apple, Alphabet, and Meta potentially failing to comply in those areas. However, the EU’s investigation into these three companies is multi-pronged.
Meta’s “pay or consent”
The investigation into Facebook and Instagram’s parent company, Meta, focuses on what’s called the “pay or consent” model. Under the DMA, tech companies must get consent from users in the EU when they share user data between their core platforms. For example, Meta needs to get permission from a user to share their account data on Facebook in order to serve the user personalized ads via its advertising platform.
Meta says that it complies with this by providing an option for EU users to subscribe to its paid subscription service on Facebook and Instagram, which provides the user with an entirely ad free experience. By not subscribing to this service, Meta argues that a user is consenting to their data being used.
“The Commission is concerned that the binary choice imposed by Meta’s ‘pay or consent’ model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers,” the Commission says.
Alphabet’s “self-preferencing”
This one is pretty straightforward and has long-been a concern among users. The Commission is investigating whether Google unfairly ranks its own products over third-party services.
Examples provided by the EU Commission include Google “self-referencing” its Google Shopping, Google Flights, and Google Hotels products over competitors searching for price comparisons or airline and hotel deals.
“The Commission is concerned that Alphabet’s measures implemented to comply with the DMA may not ensure that third-party services featuring on Google’s search results page are treated in a fair and non-discriminatory manner in comparison with Alphabet’s own services,” said the Commission in a statement.
There is one interesting note towards the end of the Commission’s statement regarding self-preferencing and a fourth Big Tech company, ecommerce giant Amazon. The Commission said it is taking “investigatory” steps into looking at Amazon’s own “self-preferencing” when it comes to its own brand of products and alleged unfair preferential placement for those items on Amazon’s website.
Apple and user choice
Apple has received a lot of coverage for its policy changes over the past month and much of it was criticism from its peers for alleged “malicious compliance” with its fee structure changes related to the App Store and alternative iOS app distribution.
However, the Commission announced its looking into another aspect of iOS: user choice.
According to the Commission, it’s investigating whether Apple has allowed users to uninstall any iOS apps, including Apple’s own apps like Safari which currently cannot be removed from iPhone or iPad devices. The Commission will also look into whether Apple has made it easy to change default iOS settings. In addition, the investigation will include whether Apple has been providing adequate choice screens providing consumers with alternatives to the default web browser or search engine.
“The Commission is concerned 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,” the Commission stated.
And, speaking of that controversial app fee structure, the EU Commission also announced that it started taking “investigatory” steps into whether these new Apple fees are contradictory to the DMA.
App store steering rules
The EU Commission is looking into both Apple and Alphabet for a possible DMA-compliance issue related to their respective mobile application stores.
App developers can sometimes pay hefty percentages of their revenue to Apple and Alphabet when a user makes a purchase or signs up for a subscription through their mobile app stores. Developers have sought to work around those fees by setting up cheaper alternatives for users to purchase from. However, both Apple’s App Store and Google Play have greatly restricted developers’ ability to “steer” users to those better offers as they seek to collect their fees.
Under the DMA, though, Apple and Google must allow developers to “steer” those users elsewhere. The EU Commission is going to investigate whether either company’s rules impose “restrictions and limitations” that don’t comply with regulation.
These investigations can take up to 12 months, according to the Commission. If the investigation discovers that a company did violate the DMA, the EU can impose a massive fine of 10 percent of the company’s worldwide turnover. The fine can double for repeated infringement.
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The EU is investigating whether Apple, Meta, and Google are complying with its new Digital Markets Act law.
