EU Lists First 7 Potential "Gatekeepers" Under The Digital Markets Act (DMA)

[LAwLz]

On the 4th of July, the EU published a list of the first 7 companies they are potentially considering "gatekeepers" according to the Digital Markets Act (DMA).

The companies are:

• Alphabet (aka Google)
• Amazon
• Apple
• ByteDance (aka TikTok)
• Meta (aka Facebook)
• Microsoft
• Samsung

 

A gatekeeper is according to the DMA a company that fulfills these three criteria:

• Has a market size big enough to impact the internal markets, which is further classified as being at least one of the following:
  • Had an annual turnover in the EU of at least 7,5 billion euros the last 3 years in a row.
  • Has a fair market value of at least 75 billion Euro and provides the same core platform service in at least 3 member states.
• Has more than 45 million monthly active end users in the EU and at least 10,000 yearly active business users in the EU in the last financial year.
• Have had 45 million monthly active end users in the EU and at least 10,000 yearly active business users in the EU for three years in a row.

 

The announcement also mentions it applies to "core platform services" and lists things such as social network services, operating systems, and search engines as being potential gatekeepers. My guess is that it would be hard to classify let's say a game or a language learning app as a "core platform service" even if it fulfills all the criteria. It seems like the law is designed to target "more important" areas where there is a risk of abuse because the service connects to other services and businesses, like an app store controlling what other businesses can and can't do in their apps, or a social media network controlling who can talk to who, and how. But that remains to be seen.

 

 

If you are labeled a gatekeeper under the DMA, you will no longer be allowed to:

• Lock in users to their ecosystems.
• No longer decide which apps you need to have pre-installed on your devices and which app stores you have to use.
• No longer be allowed to "self-preference" by treating your own products and services more favorably.
• Messaging apps will have to interoperate with each other.
• And more things.

 

 

How these things will be enforced and what the end result will look like will most likely vary from service to service.

The full legal text includes more detailed explanations, but there will probably be some arguing about what it means anyway. You can find that info in for example article 7 (Obligations for gatekeepers on interoperability of number-independent interpersonal communication services) of the full legal text if interested. That also outlines the timeline for when various services have to comply. For example, interoperability for group audio calls between gatekeepers needs to work within 4 years from the designation.

 

The goal is, in the EU commissions own words that:

Quote

Consumers will have more services to choose from, more opportunities to switch providers, and will benefit from better prices and higher quality services.

Innovative companies will no longer be prevented from reaching new customers.

That is what the DMA is all about.

 

 

My thoughts

This sounds good to me. I am a bit skeptical and worried about what the end result will be, but the intentions seem good and it sounds like the companies on the list all qualifies. Some companies will certainly be affected more than others though. Judging by the criteria it seems like for example, Samsung will basically just have to let users uninstall preinstalled apps (which they already do to a big degree), while Apple will have to rework a large portion of their services.

 

 

Sources

https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_23_3674

 

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.265.01.0001.01.ENG&toc=OJ%3AL%3A2022%3A265%3ATOC

[porina]

It will be interesting to see how the dust settles on this one, not just in the EU where it is required, but how it will spill over to the rest of the world.

[leadeater]

59 minutes ago, LAwLz said:

Judging by the criteria it seems like for example, Samsung will basically just have to let users uninstall preinstalled apps (which they already do to a big degree)

Is this just applying to Samsung in regards to mobile phones and that division of Samsung or all of Samsung? Like Samsung TVs, OLED panels, RAM, Flash storage etc?

[porina]

12 minutes ago, leadeater said:

Is this just applying to Samsung in regards to mobile phones and that division of Samsung or all of Samsung? Like Samsung TVs, OLED panels, RAM, Flash storage etc?

Without digging beyond OP it sounds like it is targeted at software and services. So hardware components would be out of scope. Hardware systems can be in scope. The TV for example, if it is a fixed feature "smart" TV I'd guess it could be out of scope, but if it offered Android-like customisation capability that could fall in scope.

[leadeater]

5 minutes ago, porina said:

Without digging beyond OP it sounds like it is targeted at software and services. So hardware components would be out of scope. Hardware systems can be in scope. The TV for example, if it is a fixed feature "smart" TV I'd guess it could be out of scope, but if it offered Android-like customisation capability that could fall in scope.

I wish it would cover TVs, they all need a good kick in the pants. I've always hated TV OS's and their horrid apps and quick obsolescence. I guess none of them have a big enough market share to be hit by this though.

[Senzelian]

Johnny EU Silverhand

[LAwLz]

28 minutes ago, leadeater said:

Is this just applying to Samsung in regards to mobile phones and that division of Samsung or all of Samsung? Like Samsung TVs, OLED panels, RAM, Flash storage etc?

I don't think anyone really knows right now, not even the EU. It's worth noting that these are just the companies being considered right now. They might be removed from the list (probably not) and what it entails will vary from company to company.

I would assume that Samsung's component manufacturing branches won't be affected by this since they would be hard to classify as a "core service platform". Their TVs might be though, since they have app stores and such. But even if they are they probably won't have to change much. Maybe allow sideloading, and uninstalling some preinstalled apps but that's probably it.

 

Some of the rules seem a bit vague but overall I feel like if you haven't done shitty things towards your users (like restricting their freedoms), then you will be fine even if you end up on the list.

 

 

I wonder if Microsoft will be forced to finally move away from their "temporary" OOXML transitional format into the strict standard version in Office.

For those who don't know, an open and free format (ODF) was proposed to become an official standard. This scared Microsoft because at the time their document format was a major vendor lock-in strategy. So what they did was create the OOXML, an open format and proposed that as the standard instead. During the (quite shady) negotiation to make OOXML a standard, Microsoft created its own hybrid version of OOXML and labeled it as a "transitional" version of OOXML. The argument was that they weren't ready to fully transition to the open OOXML standard yet and needed to retain some backward compatibility with their previous closed-source format. This was about 17 years ago and Microsoft still doesn't use the OOXML standard they themselves pushed. They use the transitional version, which only they use. That's one of the big reasons why documents written in Word don't look right when opened in for example LibreOffice.

 

 

  

7 minutes ago, leadeater said:

I wish it would cover TVs, they all need a good kick in the pants. I've always hated TV OS's and their horrid apps and quick obsolescence. I guess none of them have a big enough market share to be hit by this though.

Sadly I don't think it would help much even if TVs were included. I don't think the DMA prevents a company from dropping support whenever they want.

I totally feel your pain though. I am currently looking for a new TV and have reached the conclusion that I don't want anything other than Android TV. Because that's the only platform that provides the necessary APIs, functions and guidelines to do what I want (mainly Kodi and a third -party Youtube app that can do things like SponsorBlock).

 

Neither WebOS nor Tizen does those things. The DMA might make it so that you can get around their guidelines by sideloading, but if the OS doesn't support some things to begin with then third-party apps won't be able to do the things not allowed by the guidelines to begin with.

[leadeater]

3 minutes ago, LAwLz said:

This scared Microsoft because at the time their document format was a major vendor lock-in strategy. So what they did was create the OOXML, an open format and proposed that as the standard instead. During the (quite shady) negotiation to make OOXML a standard, Microsoft created its own hybrid version of OOXML and labeled it as a "transitional" version of OOXML

From memory I think the EU or some countries in it did make it a requirement that all official documents are saved in open document formats. Though I don't know if Microsoft's flavor has been allowed. I know in Word you can save to strict type and also open document text.

 

Spoiler

 

[Stahlmann]

1 hour ago, LAwLz said:

If you are labeled a gatekeeper under the DMA, you will no longer be allowed to:

• Lock in users to their ecosystems.
• No longer decide which apps you need to have pre-installed on your devices and which app stores you have to use.
• No longer be allowed to "self-preference" by treating your own products and services more favorably.
• Messaging apps will have to interoperate with each other.
• And more things.

These changes are potentially drastic enough that some of these companies will straight up stop doing business in the EU. Don't get me wrong, as a consumer i'd really love these changes to go through, but how much good does it to me as an EU consumer when some or all of these companies just pull out? I have huge doubts that Alphabet, Microsoft or Apple especially will just accept these rulings and incorporate them. They'd be required to completely rework their business models from the ground up if they still want to do business in the EU.

 

In my opinion the EU is reaching too high with this one, asking too much, and will probably not end up achieving anything in the end. Or they will make everything worse for the consumer by banning these Gatekeepers from doing business in the EU.

[porina]

55 minutes ago, Stahlmann said:

These changes are potentially drastic enough that some of these companies will straight up stop doing business in the EU.

Not sure if it is a good example, but the last shift like this was GDPR. Some smaller companies did that the route that the EU of the time was not worth it to them to comply, so access was lost.

 

I guess at the end of the day it is always a financial calculation. What is the cost of meeting this? If a large player were to leave, then that opens an opportunity for an existing or new player to try and take over that gap left.

 

From my personal perspective, a long standing friction point is the bundled software with OSes. In Windows' case it is worst. I have zero interest in using Edge. I have zero interest in Bing. But any interaction with the OS that calls up the web will inevitably use both, even if I have another browser set as default. At least on Android the browser setting does seem honoured. 

 

With Android in general, my problem is uninstallable apps. Usually the manufacturer's own customised ones. I have a Samsung Tab S8, and I'm forever fighting the Samsung software. Had the date of Google's tablet been announced earlier I could have held off for that. Obsolete apps that come with the OS that later get replaced with newer separate apps often can't get uninstalled either. At most, disabled.

 

I can imagine there's going to be a lot of talk at higher levels of Apple, since this probably hits them hardest. 

[TVwazhere]

1 hour ago, leadeater said:

I wish it would cover TVs, they all need a good kick in the pants.

 

[leadeater]

1 minute ago, TVwazhere said:

 

Sorry I have just hated every TV menu I've ever used and really pissed off that the native Plex app keeps getting unsupported and stops working because of the garbage level processors in TVs with pathetic codec support. AAAAaaargh lol

[Stahlmann]

9 minutes ago, leadeater said:

Sorry I have just hated every TV menu I've ever used and really pissed off that the native Plex app keeps getting unsupported and stops working because of the garbage level processors in TVs with pathetic codec support. AAAAaaargh lol

You should be a better consumer and buy a new TV when it loses Plex support. You're doing it wrong!

[TVwazhere]

2 minutes ago, leadeater said:

Sorry I have just hated every TV menu I've ever used and really pissed off that the native Plex app keeps getting unsupported and stops working because of the garbage level processors in TVs with pathetic codec support. AAAAaaargh lol

Admittedly I don't blame you. Though our TV has native casting app Support, we have an external device (chromcast i think, it's the roomates) which is must faster and easier to navigate than the built in apps. Some of the more modern TV's have been better (a recent 2021 Sony TV has pretty good app support and is relatively quickly, and was on clearance for $300 foir a 65")

[AlTech]

1 hour ago, Stahlmann said:

These changes are potentially drastic enough that some of these companies will straight up stop doing business in the EU. Don't get me wrong, as a consumer i'd really love these changes to go through, but how much good does it to me as an EU consumer when some or all of these companies just pull out? I have huge doubts that Alphabet, Microsoft or Apple especially will just accept these rulings and incorporate them. They'd be required to completely rework their business models from the ground up if they still want to do business in the EU.

This has been said before about other things and yet companies still do business in the EU. To give up doing business in the EU for a public company (and even many private companies) is practically corporate suicide. The only companies that would likely give up doing business in the EU are businesses that did very little business in the EU or businesses run by petulant spiteful CEOs who would rather destroy their business than comply with the law.

[Stahlmann]

15 minutes ago, AlTech said:

This has been said before about other things and yet companies still do business in the EU. To give up doing business in the EU for a public company (and even many private companies) is practically corporate suicide. The only companies that would likely give up doing business in the EU are businesses that did very little business in the EU or businesses run by petulant spiteful CEOs who would rather destroy their business than comply with the law.

Take Apple for example. The biggest reason why they sell so much is because they took decades building their walled garden. Even if they'd somehow comply with these rules, they would lose a huge amount of sales either way. So while it seems unprobable that they're gonna retreat out of the EU it is still a possibility.

[AlTech]

5 minutes ago, Stahlmann said:

Take Apple for example. The biggest reason why they sell so much is because they took decades building their walled garden. Even if they'd somehow comply with these rules, they would lose a huge amount of sales either way. So while it seems unprobable that they're gonna retreat out of the EU it is still a possibility.

Losing some revenue in a market is still preferable to losing all access to a market. Especially for public companies with shareholders to answer to (some of whom will be EU citizens or otherwise European more broadly).

[WereCat]

1 hour ago, leadeater said:

Sorry I have just hated every TV menu I've ever used and really pissed off that the native Plex app keeps getting unsupported and stops working because of the garbage level processors in TVs with pathetic codec support. AAAAaaargh lol

Best thing is when an update removes support for a codec or format. 

Like samsung did with avi

[LogicalDrm]

@LAwLz, please add quote boxes to those parts that are direct quotes from the legislation. Helps to see what is your addition and what direct copy.

[Mihle]

49 minutes ago, Stahlmann said:

Take Apple for example. The biggest reason why they sell so much is because they took decades building their walled garden. Even if they'd somehow comply with these rules, they would lose a huge amount of sales either way. So while it seems unprobable that they're gonna retreat out of the EU it is still a possibility.

Nah, no way they will pull out of EU. Losing profit is still way preferable to no profit.

The worst possible case is that they will raise their prices.

[SolarNova]

On the surface this is good.

Many companies exist currently that have simply been allowed to get too big, and to powerful, to the point they dictate to the consumers what they will have, and consumers have little choice but to accept it. Thats outright wrong and the opposite of how its supposed to work.

On the surface the changes listed in the OP can help mitigate that issue somewhat.

 

Im all for capitalism, its the only system thats been proven throughout history to work to any meaningful degree, but without limits, and even with some soft limits, we are all seeing the outcome. Limits need to be in place to keep things balanced, we currently have to many very large companies/groups of companies that have to much power over ...everything. It shouldn't be that way and its causing issues. Im all for anything that helps reduce these issues so long as it doesnt straight up shutdown the principles of a capitalist 'free' market.

 

Will be interested to see how things play out. its going to take years however, and no doubt this large powerful companies will use legalities and their ....'influence' ...to stop this.

[Silverflame]

50 minutes ago, Stahlmann said:

Take Apple for example. The biggest reason why they sell so much is because they took decades building their walled garden. Even if they'd somehow comply with these rules, they would lose a huge amount of sales either way. So while it seems unprobable that they're gonna retreat out of the EU it is still a possibility.

Adding to what AITech said further up: Europe/EU is a large and rich market, so I would assume dropping out doesn't make sense. From Statista [0]:
 

Quote

The Americas region accounted for the largest share of Apple’s revenue in terms of geographical distribution. As of the second quarter of fiscal year 2023, the Americas held around 40 percent of the revenue, whereas Europe came in second with roughly 25 percent.

China also imposes restrictions on companies operating there in terms of data hosting, encryption, and such, but companies comply and continue to do business there because they're such a huge market it would be silly not to. Take the recent thing with Tesla+Musk agreeing to promote "core socialist values" for example [1]; I doubt that was about values and more about not losing market access.
The EU isn't as large a market as China, sure, but I still heavily doubt Apple (or any of these companies) would abandon it.

[0]: https://www.statista.com/statistics/382288/geographical-region-share-of-revenue-of-apple/
[1]: https://twitter.com/WSJ/status/1676961765475880970

 

[Kisai]

3 hours ago, porina said:

Not sure if it is a good example, but the last shift like this was GDPR. Some smaller companies did that the route that the EU of the time was not worth it to them to comply, so access was lost.

 

Ah yes, the "this site uses cookies" nag that every single bloody site was doing pre-GDPR, and the suddenly the massive "select what privacy we can destroy" nag screen seen on every site with more than one ad on it.

 

GDPR was a blunder, and effectively broke the web, and people now wonder why "adpocalyse"'s have been a thing. It definitely wasn't ad blocking, oh no, it was GDPR, as suddenly the entire EU became "blocked by default"

 

3 hours ago, porina said:

I guess at the end of the day it is always a financial calculation. What is the cost of meeting this? If a large player were to leave, then that opens an opportunity for an existing or new player to try and take over that gap left.

 

From my personal perspective, a long standing friction point is the bundled software with OSes. In Windows' case it is worst. I have zero interest in using Edge. I have zero interest in Bing. But any interaction with the OS that calls up the web will inevitably use both, even if I have another browser set as default. At least on Android the browser setting does seem honoured. 

 

Unfortunately, it's now required for OS's to have a "WebView" in the OS because otherwise you have no ability to get "on the internet" where as that was not the case back in the days of MSIE 1-5, where MSIE and Netscape were often available on CD's, and dial-up internet often came with a branded browser. Without a WebView a lot of software simply doesn't work (same is true on MacOS.) So the requirement has to shift from "can not include" to "can not prefer".

 

Incidentally, chrome has been trying to get me to set it as default every time the "open" dialog box shows up, so chrome is actively fighting Edge for "Browser default" without permission. Likewise Windows keeps resetting things over time without asking.

 

What's extra annoying is how many "windows apps" use the WebView. Prior to the concept of a "WebView" many games used MSIE as the WebView using proprietary COM controls.

 

 

3 hours ago, porina said:

With Android in general, my problem is uninstallable apps. Usually the manufacturer's own customised ones. I have a Samsung Tab S8, and I'm forever fighting the Samsung software. Had the date of Google's tablet been announced earlier I could have held off for that. Obsolete apps that come with the OS that later get replaced with newer separate apps often can't get uninstalled either. At most, disabled.

 

I can imagine there's going to be a lot of talk at higher levels of Apple, since this probably hits them hardest. 

I feel this is just going to blow up in in the EU's face. Amazon might access to EU sellers and pass on compliance to them for example. So higher fees.

 

[LAwLz]

2 hours ago, Stahlmann said:

Take Apple for example. The biggest reason why they sell so much is because they took decades building their walled garden. Even if they'd somehow comply with these rules, they would lose a huge amount of sales either way. So while it seems unprobable that they're gonna retreat out of the EU it is still a possibility.

I am not so sure that is the case.

Even if they are forced to let iMessage interact with other messaging services, I doubt a lot of people in the EU would switch from iPhones because of it (mainly because iMessage is in general not a big deal here). I also don't think people would flock to other app stores. On the Mac you have the option to download software from places other than the store, but it is still the preferred way for most people. Being on the app store provides benefits such as being easily discoverable, having an easy payment system, and a robust update system (including a very good CDN). Plus the safety it gives your users to even try your app.

I think people overestimate how much this will actually affect Apple's bottom line. I don't think it will affect that all that much. It might be the case that now someone like Epic Games will launch an alternative app store and put Fortnite on it, and thus keeping all of the revenue. But Apple already banned them so it's not like they will lose anything they get today. Some people might download games from the Epic game store instead but how big is that market realistically?

 

Now, if Apple was a new and upcoming company then it would be a totally different thing. Not being allowed to create the walled garden would probably have hampered their progress (which just to be clear, I don't think would mean hampering progress for consumers). But this law only applies to massive companies to begin with, so I don't think it would actually have changed anything.

 

 

And as others have already said several times, the EU is a massive market and any sale is better than no sale. Hence why companies like Apple also agree to comply with laws in for example China.

[HenrySalayne]

4 hours ago, Stahlmann said:

These changes are potentially drastic enough that some of these companies will straight up stop doing business in the EU. Don't get me wrong, as a consumer i'd really love these changes to go through, but how much good does it to me as an EU consumer when some or all of these companies just pull out? I have huge doubts that Alphabet, Microsoft or Apple especially will just accept these rulings and incorporate them. They'd be required to completely rework their business models from the ground up if they still want to do business in the EU.

"They'd be required to completely rework their business models from the ground up if they still want to do business in the EU." - That's exactly what the EU tries to achieve.

4 hours ago, Stahlmann said:

In my opinion the EU is reaching too high with this one, asking too much, and will probably not end up achieving anything in the end. Or they will make everything worse for the consumer by banning these Gatekeepers from doing business in the EU.

There is no chance this will lead to an exodus of corporations and a market gap in Europe. That's scaremongering by the affected corporations, not a real threat. As we have seen so many times before.