At midnight, gatekeepers should be in place for the Digital Markets Act (DMA). It already turns out the legislation is not yet perfect, or at least not being implemented perfectly. Big Tech is cunningly trying to get out from under the rules. What goes wrong?
The DMA already proofs it is not a solution to all problems. As of midnight, previously designated gatekeepers must comply with the legislation. The list of gatekeepers includes Alphabet, which is the company that manages Google, Amazon, Apple, ByteDance, which is the company that manages TikTok, Meta and Microsoft.
All of these companies have already shared how they will comply. The gatekeepers appear to be getting creative with these rules in an effort to avoid losing in any way possible.
The rules cover several issues, including the obligation to be interoperable and more mindful of user privacy. Own products and services should also no longer be favoured over those of competitors through intrusive push notifications, for example. Apple and Google app stores may no longer have an exclusive right to offer an app store. Purchases in an app must now also be made through payment options other than those offered by Google and Apple through their app stores.
Developers continue to pay Apple
Apple was the first app store provider to provide an overview of the upcoming changes. These changes included a curious rule to continue ensuring the security of Apple software. Namely, it is blocking so-called “progressive web applications,” or PWAs, as of iOS 17.4, which bypass the company’s App Store and provide direct access to a web version of the application.
The company says the adjustment is necessary to safeguard end users against security problems from alternative browsers. Because of the DMA, Apple also loses the right to offer its web browser, Safari, as the only option for Apple users. Apple would, as a result, lose complete control of web applications by opening them through an alternative app store and running them through an alternative web browser. Therefore, Apple’s security solutions no longer protect the Apple user, and thus, the company chooses to go for a ban.
Moreover, it became clear that Apple would not let the DMA influence its revenue. The App Store was always a closed ecosystem, where developers had to give up a portion of revenue for in-app purchases. That is now changing; users must be able to sideload applications, and developers can offer alternative payment systems to app users, such as Google and Apple. Sideloading refers to installing an app from a location other than the official app store. So that Apple does not lose revenue, developers must annually pay 50 cents per app installed on an Apple device. This payment applies when the app offers a non-Apple payment system.
A possible explanation for the blocking of web applications also lies in this financial aspect. After all, if the company loses all control when an Apple user opens a web application, it will also lose its commission.
Also read: Apple App Store and browser policy changes offend competitors
Apple bans critics
Epic Games, the developer of the popular video game Fortnite, raised concerns several years ago that alternative payment systems for in-app purchases were not allowed by Apple and Google. For a short time, the game developer offered its own payment system for mobile players of Fortnite. That turned out to be against the rules of the app stores, after which Fortnite promptly disappeared from the app stores.
A resolute solution to this problem is not yet in place now that it appears that Apple and Google are charging developers prices for having apps sideloaded. Epic Games was already fiercely critical of this policy but still chose to make an app store on its own. Apple, however, now appears to be thwarting those plans. The App Store provider is choosing to silence critics by not allowing them access to Apple software. The game developer’s account was removed from the platform after a manual review.
Apple commented to Ars Technica, “Epic’s gross breach of its contractual obligations to Apple has led courts to rule that Apple has the right to terminate, at any time and at Apple’s sole discretion, ‘any or all of Epic Games’ wholly owned subsidiaries, affiliates and/or other entities. In light of Epic’s past and continuing conduct, Apple has chosen to exercise that right.”
Google follows suit
Google has clearly also learned something from Apple’s approach to app developers who offer their products outside the App Store. These developers fall under Google’s External Offers program. For that program, Google uses two fees: a sort of welcome offer for users who have had the app for less than two years. After the two-year period, the fee becomes more expensive. The fee for in-app purchases then increases from ten percent to seventeen percent. For subscriptions to an application, a developer will have to hand over five percent of revenue for the first two years, after which the amount increases to seven percent.
After passing the two-year welcome offer, developers will be allowed to opt-out. That means no more pennies will go to Google. For Google, of course, that is not an interesting option. Therefore it gives developers a hard time trying to get out from under the fees. Google argues that the developer needs permission from the app user to completely unbundle their app. The user’s permission is necessary because the user loses Google services in the process. These include security scanning, fraud prevention and continuous app updates.
Earlier this week, Google communicated what changes it is making to comply with the DMA. The company stated that developers were already allowed to let Android users sideload applications. It did not disclose the new pricing strategy at the time, but shared it later in the Play Console Help page.
Users pay for privacy
Things are not only going wrong at app stores. At Meta, the “pay or okay” model is under fire. That refers to Meta’s new subscriptions, where users must pay not to see ads on social media platforms Instagram and Facebook. That subscription simultaneously ensures the privacy of these users, as their data is not collected for advertising purposes.
How the new legislation handles this is unclear. Gatekeepers must seek users’ consent or give them options to refuse consent. Meta complies with that, as there is an option for users to not consent by paying.
Tip: We wrote a further analysis on Meta’s subscriptions in the context of European regulations in this article: Facebook and Instagram ad-free for those who pay: creative with the law?
Microsoft continues to impose software
For Microsoft, the rules do not yet apply to Copilot. The chatbot is currently not in the rules because it has only been released as a preview in the EU. That while Microsoft is already considering ways to force the chatbot on users. To that end, it plans to integrate Copilot into the keyboard on Windows devices.
These bundling practices are prohibited within the DMA. However, as long as Copilot is not part of that, Microsoft seems to be able to go ahead with the plan. Until then, lawmakers must watch helplessly. Moreover, it is not certain that Copilot will have to comply with DMA laws in the future. The company Microsoft may have been designated as a gatekeeper, but that is why the legislation does not necessarily apply to all of the gatekeeper’s products and services. Bing, Edge and Microsoft Advertising were recently granted exemptions from the DMA by the European Commission. The company’s search engine received an exception because it holds only a small market share compared to its competitor, Google Search.
Also read: Why Microsoft keeps pushing the limit by forcing its software on you
Too many loopholes to DMA
So, the DMA is clearly a law that, on paper, takes care of Big Tech’s dominance, but in practice, it has too many snags. Big companies have more than enough financial resources to have a large number of lawyers searching for loopholes in the law.
Moreover, because of their acquired dominance, these companies are not afraid to actively exploit these gaps. In the example of Google and Apple’s app stores, developers who do not pay cannot release apps because the companies also have full control over the operating systems of all smartphones. And by excluding Epic Games from Apple’s software, the company is sending a clear message to critics.
Users who do not want to pay Meta but still want to ensure their privacy are forced to stop using Meta’s social media platforms. Meta knows that only a small number of users take that resolute measure, while the majority of users are all too happy to kill their time on the platforms.
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