Illuminating the Digital World The Transformative Power of the Digital Markets Act (DMA).
In recent news, the European Commission (EC) has opened investigations into three of the Big Six tech gatekeepers due to suspicions of non-compliance with the Digital Markets Act (DMA). The penalties for these offenses could be severe, with initial offenses potentially costing the company 10 percent of its global revenue, and subsequent violations doubling that amount. For a company like Apple, this could mean a fine of over $35 billion.
The EC has suspicions that Google Play is breaking anti-steering rules with its app store and that Google Search continues to “self-preference” Alphabet’s services in search results. Apple faces a similar charge of steering in the App Store, but the EC also believes it is skirting requirements that allow users to pick their default apps. Lastly, Meta’s ad-free subscription model might be a “pay or consent” scheme to avoid user-privacy violations.
Commission Vice President of Competition Policy Margrethe Vestager stated, “We suspect that the suggested solutions put forward by the three companies do not fully comply with the DMA. We will now investigate the companies’ compliance with the DMA to ensure open and contestable digital markets in Europe.”
The EC has ordered the companies to “retain certain documents” so it can review them to determine if they comply with the law. Amazon and Microsoft also received retention orders, but the Commission stopped short of investigating them. It seems that Bytedance is the only gatekeeper that is not under a microscope.
One of the more interesting aspects of these investigations is the EC’s interest in Facebook’s ad-free subscription offering. Under this model, users can pay a fee to disable advertising on Facebook and Instagram. However, EC Commissioner Thierry Breton has indicated that this could be seen as a “pay or consent” scam.
“The DMA is very clear: gatekeepers must obtain users’ consent to use their personal data across different services,” Breton said in a separate statement. “And this consent must be free!”
If the EC rules that Meta’s ad-free subscription is unlawful, it could have implications for other subscription services with ad-free tiers. The outcome of this investigation will be closely watched.
The probes come as no surprise, as competitors have been complaining about Big Tech’s efforts – most notably Apple’s – to implement DMA compliance policies since the beginning of the year. The EC expects its investigations to conclude within 12 months.
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