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Tech giants face new reality under the EU's Digital Markets Act

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Mar 6, 2024
Illustration of the stars of the European Union flag forming a clock, with the time approaching midnight.

Illustration: Brendan Lynch/Axios

On Thursday, the European Union is forcing the world's biggest tech and social media companies to change the way they do business in the name of consumer choice and competition.

Why it matters: Europe's Digital Markets Act is the most sweeping tech competition legislation yet, and marks a win for smaller tech firms and customers who have complained about Big Tech's operating rules.

  • Companies designated as "gatekeepers" falling under the scope of the law — which goes into compliance March 7 — include Meta, ByteDance, Alphabet, Apple, Amazon and Microsoft.

The big picture: The DMA is the latest example of Europe setting the stage for tech regulation, along with the GDPR, the Digital Services Act and the forthcoming AI Act.

  • The amount of work that's gone into complying with the DMA has been extensive.
  • Meta, for example, in its DMA compliance report said 11,000 employees worked on it, doing 590,000 hours of engineering and technical work.

What they're saying: "A decade ago, the tech companies were sort of like teenagers, and they really didn't have much regulation," Bill Echikson, senior fellow at the Center for European Policy Analysis, said during a briefing with reporters this week.

  • "Now they're grown-ups and they are going to be regulated a little bit like banks, telecoms and other industries that have tremendous impact on our lives and on the economy."

Most companies are promising to offer increased data portability and advertising transparency. Here's a few other key ways the "gatekeepers" plan to comply with the DMA, for European customers:

  • Meta will offer users an ad-funded or subscription-funded service and people can deny using their data across different Meta products.
  • Google will make changes to its search results for flights, hotels and shopping (and will remove the Google Flights box), and allow outside messaging services to work with WhatsApp and Facebook Messenger.
  • Microsoft will let Windows users uninstall Microsoft apps and provide more data sharing choices and ways to change default options. For LinkedIn, there will be new APIs for people and developers to access their data and a choice whether to connect profiles to LinkedIn jobs, marketing and learning courses.
  • Amazon will ask customers to approve the use of their data for personalized ads and will give advertisers more detailed information in pricing reports.
  • Apple says it has security concerns about DMA requirements, but has rolled out a tranche of new features for developers (much more on those here), including letting them use alternative payment systems and app stores for a price they're calling a "Core Technology Fee."
  • ByteDance has launched new data portability tools, and has tried, and failed so far to appeal its designation as a gatekeeper in the category of "crucial social network."

What we're watching: The European Commission said earlier this month it had received notifications from Booking, ByteDance (for advertising, separate from its original social platform designation) and X about potentially meeting the threshold to be considered gatekeepers.

  • Within 45 days of March 1, the Commission will decide if those companies are indeed gatekeepers. From then, they would have six months to comply with the DMA.
  • The European Commission will review gatekeepers' compliance with the DMA and can fine companies for not adhering to the law.

My thought bubble: In the U.S., antitrust action is going to be playing out in the courts as Congress has largely turned its attention away from tech antitrust bills.

  • So yet again, Europe will lead in this space, leaving U.S. companies to offer different versions of their services across the world.
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