State Champ Radio Digital Markets Act
European Union regulators opened investigations into Apple, Google and Meta on Monday, the first cases under a sweeping new law designed to stop Big Tech companies from cornering digital markets. The European Commission, the 27-nation bloc’s executive arm, said it was investigating the companies for “non-compliance” with the Digital Markets Act.
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The Digital Markets Act that took full effect earlier this month is a broad rulebook that targets Big Tech “gatekeeper” companies providing “core platform services.” Those companies must comply with a set of do’s and don’ts, under threat of hefty financial penalties or even breaking up businesses. The rules have the broad but vague goal of making digital markets “fairer” and “more contestable” by breaking up closed tech ecosystems that lock consumers into a single company’s products or services.
The commission has heard complaints that tech companies’ measures to comply have fallen short, European Commission Vice President Margrethe Vestager, the bloc’s competition chief, said at a press briefing in Brussels. “Today, we decided to investigate a number of these suspected non-compliance issues. And as we unearth other problems, we will tackle those too.”
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The companies have been ordered to hold on to certain documents that the commission can access in current and future investigations, she said.
Regulators are looking into whether Google and Apple are fully complying with the DMA’s rules requiring tech companies to allow app developers to direct users to cheaper options available outside their app stores. The commission said it’s concerned the two companies are imposing “various restrictions and limitations” including charging recurring fees that prevent apps from freely promoting offers.
Google is also facing scrutiny for not complying with DMA provisions that prevent tech giants from giving preference to their own services over rivals. The commission said it is concerned Google’s measures will result in third-party services listed on Google’s search results page not being treated “in a fair and non-discriminatory manner.”
Google said that it has made “significant changes” to the way its services operate in Europe to comply with the DMA. “We will continue to defend our approach in the coming months,” Google’s director of competition, Oliver Bethell, said.
The commission is also investigating whether Apple is doing enough to allow iPhone users to easily change web browsers.
Apple said it’s confident that its plan complies with the DMA, and it will “continue to constructively engage with the European Commission as they conduct their investigations.” The company said it has created a wide range of new developer capabilities, features, and tools to comply with the regulation.
The commission is also looking into Meta’s option for European users to pay a monthly fee for ad-free versions of Facebook or Instagram, so they can avoid having their personal data used to target them with online ads. “The Commission is concerned that the binary choice imposed by Meta’s ‘pay or consent’ model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers,” it said.
Meta said it will “engage constructively” with the Commission. “Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA,” it said in a prepared statement.
The commission said it aims to wrap up its investigations within 12 months.
If bosses at the world’s biggest technology companies were still in any way doubting the European Union’s commitment towards regulating the digital marketplace, the 1.8 billion euro ($1.95 billion) fine levied against Apple on Monday (March 4) by the European Commission for breaking competition laws over music streaming served as a powerful statement of intent.
This week, more new EU rules come into force governing how the largest online platforms operate in Europe, now that the deadline for complying with the Digital Markets Act (DMA) has passed.
Beginning today (March 7), the six tech giants designated “gatekeepers” by the European Commission — Apple, Google parent company Alphabet, Amazon, TikTok-owner ByteDance, Meta and Microsoft – are required to comply with a raft of legislative changes designed to rein in their global dominance.
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They include outlawing companies favoring in-house services at the expense of third-party providers and forcing platforms to offer other businesses, such as apps, access to the data they generate – allowing smaller services to contact their customers directly and making it easier for users to switch services.
The laws are enforceable by fines of up to 20% of total worldwide turnover (aka, gross revenue) for repeat infringers, or, in extreme cases the “last resort option” of forced divestments and the break-up of businesses.
THIS IS FINE
The changes are already having a significant impact on digital music services and, in turn, the global record business.
In January, Apple announced that it will begin allowing European users to download app stores other than the company-operated one that comes installed on iPhones. It will additionally lower the fees it charges developers for purchases made through the App Store, reducing commission from the existing 15% to 30% level to between 10% and 17% for developers using the company’s payment-processing system.
However, Apple’s plans to charge “high volume” services with over one million users a €0.50 ($0.54) “Core Technology Fee” per download, per year, for using alternatives to the App Store has been heavily criticized by a number of European businesses, including Spotify and Deezer.
“Apple’s new terms not only disregard both the spirit and letter of the law, but if left unchanged, make a mockery of the DMA,” said the streaming services in an open letter to the European Commission, sent last week and also signed by 32 other European digital companies and associations, including trade body Digital Music Europe.
The new fee structure, which only apply in the 27 EU member states, will deter app developers from opting into the revised terms “and will hamper fair competition,” say Spotify and Deezer, calling on regulators to take “swift, timely and decisive action against Apple.” (In January, Spotify stated in a company blog post that the new fees “equates for us to being the same or worse as under the old rules.”)
Similar anti-competition concerns were behind the European Commission’s decision to fine Apple 1.8 billion euros at the start of March, following longstanding complaints from Spotify over Apple’s restrictions to outside developers and the 30% fee it charges them on all purchases made through iOS apps. (Apple has said it will appeal the fine, which was issued under existing EU terms, rather the Digital Markets Act).
Defending its response to the new EU provisions, Apple estimates that less than 1% of developers will pay the Core Technology Fee and warned that the DMA brings greater risks to users and developers by compromising its ability to detect malware, fraud and illicit content in external apps.
NOT JUST APPLE
Other so-called gatekeepers – defined by policy makers as a platform with an annual turnover of more than 7.5 billion euros ($8.1 billion) and more than 45 million active monthly users in the EU region — are also making sweeping changes as a result of the DMA.
Aside from Apple, music executives will be paying most attention to how ByteDance, the Chinese owner of TikTok responds to the law’s provisions. In November, the company launched an appeal against the EU’s classification of TikTok as a “gatekeeper” arguing that the platform is a “challenger, not an incumbent, in the digital advertising market” and that the new rules could hamper its ability to “remain competitive and grow.”
Despite the ongoing legal challenge, TikTok has already taken a number of steps to comply with the terms of the DMA, including the launch of enhanced data portability tools that allow developers to download and export data profiles, followers and posts from TikTok to other services with users’ permission. These changes are being introduced now to European users, TikTok announced in a blog post on March 4, “with plans to roll out globally in the near future.”
In January, Google and YouTube parent company Alphabet announced that it will allow users to pick their default browser and provide more links to competing sites when searching Google – although, like Apple, Alphabet’s compliance with the DMA has been questioned.
Posting on X (formerly Twitter) this month, Epic Games CEO Tim Sweeney criticized the tech giant for imposing a commission fee of up to 27% for any app purchases made not using Google’s payment services. (Google/Alphabet has previously been issued three major fines totaling 8.2 billion euros by the EU over antitrust issues).
Meanwhile, Meta is allowing users to separate their Facebook and Instagram accounts to prevent personal information being shared for targeted ads. Amazon is modifying its Amazon Ads service to provide stronger data protections for customers, and Microsoft is implementing changes to its Windows operating system.
The terms of the Digital Markets Act only apply to companies and services operating in the 27-member state EU block, but their impact extends far afield. Following the EU’s lead, similar regulations to rein in tech companies’ dominance are being drawn up in several other nations, including Japan, South Korea, India, Brazil, Australia and the United Kingdom.
What meaningful impact the DMA or comparable international legislation will actually have on curbing Big Tech — and the music companies that either drive or rely upon them to reach audiences — could take years to be felt, if at all, but EU regulators say they are not shying away from the challenge.
“We are looking very carefully at how companies are complying [with the DMA]” the European Commission recently said in a statement, “and once we have full enforcement powers will not hesitate to act.”
Spotify has outlined a number of changes it will soon be introducing for European users, including the ability to make in-app purchases, in response to new EU legislation governing how online companies and platforms operate in the region.
Beginning in March, Spotify’s European users will be able to make “seamless and secure” in-app payments for products such as audiobooks on iPhone and Android devices, the Swedish streaming company announced in a blog post on Wednesday (Jan. 24).
Users of Spotify’s free ad-supported service will additionally be able to upgrade to its premium offering through their phone (without leaving the app), while the company says it will begin directly communicating with customers about subscription offerings, upgrades, deals and promotions.
The changes are being implemented as a result of the European Union’s Digital Markets Act (DMA), a sweeping piece of legislation designed to curb the dominance of tech giants like Apple, Amazon, Google and Meta. The DMA forces tech companies trading within the EU region to open up their services and platforms to other businesses and allow them to operate more freely. For companies like Spotify, the law means that Apple is no longer able to charge them a 30% fee on all purchases made through its App Store — a long-running practice that served as a source of contention between the two companies and which is now prohibited in EU member states (smaller developers pay fees of around 15%).
Although the law officially came into force in November 2022, companies have until Mar. 7 to comply with the regulations. Apple didn’t respond to requests for comment when contacted by Billboard.
“For years, even in our own app, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where or how to buy it,” Spotify said in the blog post, entitled “The DMA Means a Better Spotify for Artists, Creators, and You.”
The company goes on to say that the changes it’s implementing will mean “good things for artists, authors, and creators looking to build their audiences of listeners, concert-goers, and audiobook-loving fans.”
Some of the ways Spotify said it will be looking to do that is by allowing creators to download its “Spotify for Artists” and “Spotify for Podcasters” tools directly from its site and alternative app stores.
“It should be this easy for every single Spotify customer everywhere,” stated the company, referencing its well-publicized battles with Apple in the United States and other international markets over transaction fees the tech company charges app developers.
Last week, Spotify accused Apple of “stopping at nothing” to protect its profits after the firm introduced commission fees of up to 27% in the United States for app developers that choose to sell products in places other than its own App Store.
Apple introduced the fees following a long-running legal battle with Fortnite developer Epic Games in U.S. courts. Although Epic lost the case, a California judge ordered Apple to make changes to how its store operates, including allowing links to outside platforms and third-party services. Last week, The Supreme Court rejected appeals from both Apple and Epic Games.
In Wednesday’s blog post, Spotify said it will “keep fighting” for governments and regulators to pass laws like the DMA “because freedom from gatekeepers means more choice for consumers and positive impact for artists, authors, creators and developers everywhere.”
One front in that fight is taking place in the United States, where Spotify founder/CEO Daniel Ek has actively lobbied Congress and the Biden administration to pass the Open App Markets Act, which would disallow Apple, Google and other app stores with more than 50 million users from forcing app developers to use their payment systems as a condition of distribution. Though the bill never made it to the floor of either chamber, advocates reportedly expect its reintroduction soon.
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