EU’s Digital Markets Act will give a boost to tech giants’ smaller rivals By Reuters
© Reuters. FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium, September 20, 2023. REUTERS/Yves Herman/file photo
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Written by Puyun Ji and Martin Coulter
BRUSSELS/LONDON (Reuters) – As the world’s biggest technology companies revamp their core online services to comply with the European Union’s landmark digital markets law, the changes could give them a competitive edge over some of their smaller rivals and even peers. I can now do it.
The DMA is Europe’s bid to rein in Alphabet’s (NASDAQ:) Google, Amazon (NASDAQ:), Apple (NASDAQ:), TikTok owner ByteDance, Meta Platforms (NASDAQ:) and Microsoft (NASDAQ:) and create a level of competition. It’s an attempt. A field for smaller competitors and ultimately more competition for Europeans.
This sweeping bill is forcing some of the world’s largest technology companies to make it easier for consumers to pick and choose services from a variety of providers.
“The winners will be Europe’s smaller companies, who will have more choice and more visibility than their larger counterparts,” said Christophe Carugati of advisory firm Digital Competition.
For example, Meta must make its Facebook Messenger and WhatsApp services interoperable with eligible competitors as long as they meet the company’s technical and security standards.
In practice, this means that users of other messaging apps like Signal and Telegram, which are gaining international attention for their focus on user privacy, will soon be able to chat with their Messenger and Whatsapp contacts without having to switch apps.
Meta said in its compliance report that it is striking a balance between maximizing user security, safety, and privacy while creating a viable approach for third-party providers interested in interoperating with Meta.
Likewise, users of Google’s Android phones will be able to choose their default search engine when setting up their devices, which means big opportunities for alternatives like privacy-focused DuckDuckGo and environmentally conscious Ecosia.
“The implementation of these new regulations is a step in the right direction, but the proof of the pudding is always in what is eaten and whether there is a meaningful change in market share,” said Sophie Dembinski, head of public policy at Ecosia.
Google said in a blog post this week that the changes to search results will increase traffic from large brokers and aggregators while reducing traffic from hotels, airlines, merchants and restaurants.
Consumers in the EU have also gained new privacy protections as the DMA introduces new rules for how these companies use their data.
For example, users can separate their Facebook and Instagram accounts so information is no longer shared across platforms for tracking and targeting purposes.
App Store Wars
While DMAs offer smaller competitors a new avenue to reach consumers, established tech giants may see their peers take a sliver of market share.
Apple stands to lose the most as DMA opens its lucrative App Store. This is an opportunity that big tech competitors and smaller startups alike are likely to jump at.
Under the DMA, Apple must allow software developers to distribute apps to EU users outside of its own App Store.
Apple warns that changes to its iOS mobile operating system, Safari web browser, and App Store may introduce new avenues for malware, scams and fraud, illegal and harmful content, and other privacy and security concerns, creating greater risks for users and developers. warned that this could lead to Threat.
Apple’s critics say the company is only interested in protecting its profits because it takes a 30% commission on in-app purchases.
The implementation of the new rules comes amid an escalating conflict between Apple and Fortnite maker Epic Games, one of the company’s longtime critics.
Fortnite had planned to launch its own app store on iPhone and iPad in the EU under the DMA. But on Wednesday, Apple terminated a new developer account that Epic had created in Sweden. In response, Epic accused Apple of eliminating one of its biggest potential competitors from the Apple App Store.
The committee has asked Apple for clarification and sees the issue as a priority, which could become a test case for the new rules.
