Summary:
- Last week the six biggest operators – Alphabet, Amazon, Apple, Meta, Microsoft and ByteDance – were forced to toe the line on competition, advertising, interoperability and more. It was a gamechanger
Last Wednesday was a landmark moment for the tech industry, or at any rate for that part of it that aspires to do business in the EU. It was the day when six of the biggest companies in the world had to start complying with the EU’s Digital Markets Act (DMA) – the most sweeping law thus far aimed at regulating their activities in one of the world’s biggest marketplaces.
The act – which aims to promote fair competition and limit the market power of the largest tech companies (“gatekeepers”) – has been long in gestation, and was vigorously opposed by them from the outset. So the fact that it emerged from the Brussels lawmaking process with some of its teeth still intact is itself a small miracle. But what is even more delicious is to see these behemoths grudgingly announcing how they are going to comply with what they see as an infuriating infringement of their freedom to do whatever they please.
The act doesn’t apply to all tech companies, only to those with either a market capitalisation of more than €75bn (£64bn), or having at least 45 million users and €7.5bn annual turnover in the EU. In effect, this means just Alphabet, Amazon, Apple, Meta, Microsoft and ByteDance (owner of TikTok). The fact that five of the six are US companies has, of course, led to complaints that the pesky Europeans have it in for poor defenceless American giants. Cue violins.
The act imposes serious obligations: companies will have to allow third-party apps and app stores on their platforms; provide transparent advertising data; allow users to easily uninstall pre-installed software or apps; enable interoperability between different messaging services, social networks, and other services, allowing users to communicate seamlessly across platforms; and be more transparent about how their algorithms rank and recommend content, products and services.
It also prohibits certain practices by gatekeepers: favouring their own services over third-party ones, for example; engaging in self-preferential activities; and using private data from business users to compete against them. In other words, an end to tech business as usual.
Importantly, the DMA has real teeth. It gives the European Commission the power to conduct market investigations and impose fines of up to 10% of a company’s annual turnover for non-compliance, with repeat offences (what one might call the Elon Musk provision) leading to fines of up to 20% of global revenue.
What will this mean for consumers and end users of tech services in the EU? It depends on which companies and services they use. Android users will be able to choose which browser and search engine they want to use; and they’ll get more links to competing sites when searching Google for things such as flights and hotels. iPhone users will find that Apple’s app store is not the only place from which they can download apps, and that they will have a wider range of browsers to choose from; they will also be able to use their phones to make contactless payments with services other than Apple Pay in banking and wallet apps.
Meta users will find that WhatsApp will enable them to see messages from other messaging services (such as Signal) and that they will be able to sever the links between their Instagram and Facebook accounts.
Amazon users in the EU will find that they will be asked for permission to collect their data for personalised ads. This will affect Amazon’s ability to collect information from its entertainment services, which include Amazon Prime Video, IMDb and Twitch, as well as devices such as Kindle e-readers and Fire tablets, and app stores and operating systems.
One could go on, but you get the point. The existential challenge for societies today is whether they are capable of reining in tech power. We do know that it can be done, because China already does it well. The question is whether liberal democracies are up to the job. The significance of the DMA is that it’s the first time we’ve really had a proper shot at it. So this is a critical experiment for democracies; and there’s a lot hanging on the outcome.
What I’ve been reading
Outdated visions
The science fiction of the 1900s. An extraordinary essay by sci-fi writer Karl Schroeder on his Substack channel about our goals for the future.
Parent power
Developing AI like raising kids. The transcript of a remarkable conversation between Alison Gopnik and Ted Chiang about looking after the needs of machines.
Future imperfect
Things don’t only get better. A characteristically thoughtful Substack post by Helen Beetham on why AI isn’t going to improve our lives.
