European digital markets law strikes at big tech

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If America’s antitrust laws motto “smash big techEurope now has its own variation: “Don’t break ’em, break ’em.”

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It’s advice Cédric Oh, France’s digital economy minister and central figure in drafting the new EU Digital Markets Act (DMA), said he stayed with him as he negotiated sweeping new rules to tackle the power of big tech in Europe. . “That’s what the DMA is doing today,” he said at a press conference on Friday.

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Hours earlier, late Thursday night, European lawmakers agreed to aggressive new rules aimed at hacking the app market to admit smaller competitors.

The DMA, which is expected to go into effect before the end of this year, will require companies such as Apple, parent company Facebook Meta and Google to intertwine their services with those of competitors. According to Members of the European Parliament (MEP), this means that Apple will allow iPhone users to download apps from competing app stores, and WhatsApp will have to allow people to use its app to communicate with others through competing messengers. Otherwise, they could be fined up to 20 percent of their global turnover, and the European Commission could also impose a merger ban.

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MPs brush off accusations of anti-Americanism from outside Washingtonby writing the rules so that Europe can focus its resources on dominating the big tech market. Only companies with a market capitalization of more than 75 billion euros ($83 billion) and 45 million monthly active users from the EU are subject to the law.

Technically, the law still has to be voted on in the European Parliament and among representatives of the 27 EU member states, but its approval is considered a formality. Margrethe Vestager, Vice President of the European Commission and head of digital, said Friday she expects the DMA to come into effect in October. From that date, technology companies will have to prove that they do not interfere with competition. “The commission no longer has to prove to them that they have unfair business models,” says MEP Andreas Schwab, lead negotiator for DMA.

The change that Europeans will most notice is that they will no longer be forced to use a technology platform just because it is the most popular, says Marcel Kolaya, Czech MEP from the Greens/European Free Alliance group in the European Parliament. “There are big providers – as they are called in the legislation, ‘gatekeepers’ – who have a huge number of users and use this as an advantage of the service,” he says. “So citizens join the service not necessarily because they think it’s the best, but because it’s the most used and where they find the most of their friends or business associates.”

DMA plans to change this. From October, WhatsApp users will be able to contact people using other messaging services such as Signal or Telegram if those companies subscribe to the new system. It’s not clear if smaller messengers really want to interact with WhatsApp. “Interoperability will strengthen the leaders’ monopoly, not break it,” says Julia Weiss, spokeswoman for the German messaging app Threema, which charges more than 10 million users a monthly or annual fee. “If existing users of free messenger A with poor privacy practices can communicate with users of paid privacy-conscious messenger B, they will not pay money for messenger B, effectively depriving it of its only source of income.”

Everyone finds it normal to call without knowing which provider the other person is using, says MEP Paul Tang. “It should be a general exchange. It’s not just that Threema or Signal don’t want it, but the user experience.”

Some MEPS members, including Tang, have expressed frustration with a compromise that weakens the idea of ​​interoperability rather than applying it to more services. “Social media interoperability has been relegated to the distant future,” Martin Schirdevan, German MEP, Co-Chair of the Left group in the European Parliament, told WIRED via email. He also called it a “scandal” that users would have to wait three years before group chats could include members from different apps.

The Digital Markets Act is part of a dual technology bill that MEPs promise will change Europe’s relationship with US tech giants. While its counterpart, the Digital Services Act, focuses on illegal content, the DMA is Europe’s response to complaints that have ricocheted across the continent for years. Swedish Spotify He speaks Apple’s app store fees give Apple Music an “unfair advantage.” Swiss mail provider ProtonMail He speaks Google and Apple use default settings to give preference to their own email apps on Android and iPhone. The German cloud provider NextCloud has branded the way Microsoft bundles its OneDrive cloud storage service with the company’s other products is seen as anti-competitive.

However, European tech companies were hesitant to celebrate the new rules. The EU could go even further, says ProtonMail founder Andy Yen, who advocated for “selection screens”, or a list of email providers that users can choose from when setting up a new device. “Based on what has been made public so far, it appears that selection screens will only be implemented for a very limited range of services, but we will have to wait for the final text to know for sure,” he says.

“We are thinking [the DMA] not strong enough to stop the anti-competitive behavior of the tech giants,” says Frank Karlicek, CEO and founder of Nextcloud. “Moreover, the effects of DMA will be implementation dependent and it will take time to show real results.” Rich Stables, CEO of French price comparison service Kelkoo Group, described DMA only as “potentially transformative”.

Tang says companies should not judge DMA by the laws that preceded it. The legislation will be enforced by the Commission, unlike the GDPR, which is enforced by member states. “This is a big change,” Tan says. He adds that even if companies don’t see specific answers to their problems in legislation, the DMA includes tools to address a wide range of problems. “We also have Article 10, which allows the Commission to impose new obligations on gatekeepers,” he says.

However, the skepticism was supported by the tech giants who fought against the legislation. Lobbyists working on behalf of Google, Apple, Facebook, Amazon and Microsoft have held 48 meetings since December 2019 with officials in the European Parliament and the European Commission, Brussels-based Transparency International EU told WIRED, though the group said it was only a partial meeting. . picture, as not all MEPs publish lobby meetings.

An Apple spokesperson said the company is “concerned that some DMA provisions will create unnecessary privacy and security vulnerabilities for our users, while others will prevent us from charging fees for intellectual property in which we invest heavily.” Google has said it supports many of the DMA’s ambitions for consumer choice and interoperability, but that the company is “concerned that some regulations could reduce innovation and choice available to Europeans.”

Amazon said it is revisiting the value of DMA for the company. Meta and travel company, one of the few European tech giants expected to be affected by the law, declined to comment. Casper Klinge, Microsoft vice president of European government affairs, said the company “supports” DMA.

And there are indications that the legislation is already in place, even before it has gone into effect. On the WednesdayThe day before European lawmakers met for final talks, Google signaled its readiness to abide by the new rules by allowing Spotify to test its own payment system on its Android app.

“I think DMA has already shown to be efficient, even before it was agreed yesterday,” Schwab says.

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