EU Designates Tech Giants as Gatekeepers
Tech giants Alphabet (owner of Google), Amazon, Apple, Chinese TikTok’s ByteDance, Facebook’s Meta, and Microsoft have been designated as ‘gatekeepers’ under the EU Digital Markets Act, the European Commission announced on Wednesday (6 September).
A total of 22 “core platform services” provided by these online gatekeepers now have six months, until March 2024, to comply with strict rules — aimed to promote fair competition and give users more power over their devices.
Potential New Designations for Gatekeepers
Potential new designations for gatekeepers could be announced in February 2024 — meaning the list could be expanded (Photo: European Commission)
The list includes social media companies such as TikTok, Facebook, Instagram, Google’s Chrome and Apple’s Safari, Android and iOs operating systems, YouTube, messaging services like WhatsApp, ad services from Google, Apple and Windows, as well as others such as Google Maps, Amazon Marketplace, and the Apple App Store.
However, potential new designations for gatekeepers could be announced in February 2024 — meaning this list could be expanded.
The EU Commission has launched a market investigation to assess whether Apple’s iMessage and Microsoft’s services (Bing, Edge and Microsoft Advertising) should be added to the list.
While these platforms meet the threshold to be designated as gatekeepers, both Microsoft and Apple have argued that these services do not qualify as “gateways”.
Likewise, the EU executive has launched an investigation into Apple’s iPadOS due to its market importance and despite not meeting the thresholds.
‘Gatekeepers’ are defined as those tech giants that have had an annual turnover of at least €7.5bn over the past three years and at least 45 million monthly active users on an online platform in the EU.
Under the Digital Market Act, these companies will not be allowed to block users from uninstalling pre-installed software or apps, to “self-preference” their products or decide which app store users must have.
Google’s Oliver Bethell said in a blog post that the company’s aim is “to make changes that meet the new requirements while protecting the user experience and providing helpful, innovative and safe products for people in Europe”.
But Wednesday’s announcement has nonetheless sparked criticism from TikTok’s ByteDance.
“We support the objectives of the DMA but fundamentally disagree with today’s designation decision,” a spokesperson said in a statement. She said the decision risks undermining the overall goal of the new law by protecting “actual gatekeepers” from “newer competitors”.
Who’s Not on the List
The EU executive left out Gmail, Outlook.com and Samsung Internet Browser from the list of gatekeepers, despite meeting the thresholds.
Notably, cloud services such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud — which dominate the cloud infrastructure services market in the EU — were also left out.
Elon Musk’s X , better known under its previous name of Twitter, is also not part of the list.
According to Jan Penfrat, an expert at the Brussels-based European Digital Rights (EDRi), while Twitter “has more than enough monthly active users in the EU to qualify, the company isn’t expected to have a ‘significant impact in the internal market’ measured by its annual turnover.”
The companies designated as gatekeepers will have to present a report to the commission, detailing how they will comply with obligations under the new EU law.
Tech companies will face fines if found in breach of the law. However, how the 27-nation bloc will ensure efficient compliance remains uncertain.
‘The Network Effect’
One of the aims of the new EU law is to allow European start-ups and developers to compete with American and Chinese tech giants in a fairer environment.
For years, Apple and Google have been charging app developers entry fees for their online stores, but some popular app developers like Swedish Spotify have complained about these high fees.
The Digital Market Act aims to drive competition in app stores by giving consumers the possibility to download apps from other stores and choose the payment method for in-app sales.
However, experts argue that the new obligations are unlikely to weaken Google and Apple’s market power.
“The DMA tends to ignore the benefit side. It bets that price competition may overcome the gravity force of network effects,” wrote economist Bertin Martens earlier this year.
“App developers want to be where consumers are, and vice-versa, meaning that developers must be present in both the Apple and Google Play stores, while consumers have no incentive to switch to other stores because it would not give them access to more apps,” his analysis found.