Digital Markets Act (DMA), the European Union’s (EU) flagship legislation aimed at fostering fair competition and transparency in the digital sector, has prompted a significant move as the EU begins investigating the business practices of tech giants such as Apple, Google, Meta (formerly Facebook), and Amazon. There are growing concerns that the implementation of the EU Digital Markets Act (DMA) may have encountered obstacles, potentially impeding its intended purpose.
The European Commission, which is the EU’s executive branch, said on March 25 that it was looking into these companies’ acts because they didn’t follow the rules. The investigation focuses on specific marketing and ranking strategies used by the tech giants that are thought to not meet the requirements set out in the DMA.
Among the practices under scrutiny are Alphabet’s (Google’s parent company) rules regarding “steering” within its Google Play Store and self-preferencing on Google Search, Apple’s regulations on steering in the App Store and Safari’s choice screen, Meta’s contentious “pay or consent model,” and Amazon’s ranking practices on its sprawling marketplace.
Digital Markets Act (DMA) Compliance Mandate
The Commission has mandated that the companies preserve specific documents to facilitate monitoring of their compliance with DMA requirements. These proceedings are slated to conclude within 12 months, with potential fines of up to 10% of the company’s global turnover looming if violations are confirmed. Moreover, systematic infringement could compel the designated “gatekeepers” to divest parts of their business or face restrictions on acquiring additional services.
The DMA, heralded as a pivotal piece of legislation, seeks to create fair and contestable markets in the digital realm. It specifically targets “gatekeepers,” defined as major digital platforms wielding significant influence over the digital economy. Alphabet, Amazon, Apple, Meta, ByteDance (owner of TikTok), and Microsoft are among the designated gatekeepers.
This investigation follows hot on the heels of a lawsuit filed by the United States Department of Justice (DOJ) against Apple on March 21st. The lawsuit alleges that Apple’s stringent app market rules and alleged monopolistic practices stifle competition and innovation. It further contends that Apple exercises monopolistic control over the smartphone market, compelling developers to use its payment system, thus creating a lock-in effect for both developers and users.