The European Union’s Digital Markets Act (DMA) came into force in March 2024. Intending to reduce the cutthroat competition and monopoly behavior among technology companies, the new law regulates and revamps Internet business operations. The law makes it harder for Internet platforms to abuse their power by creating gatekeeper rules. According to a report by Consumer News and Business Channel (CNBC) on June 24, the European Commission announced on the same day that it preliminarily found that Apple’s App Store was suspected of violating the EU’s Digital Markets Act. It was the first shot at Internet giant company since DMA came into force. In the announcement, the European Commission said that the Apple App Store’s clause agreement doesn’t allow app developers to provide specific price information within the app, nor do they allow developers to bypass the Apple App Store and provide price or discount information directly to consumers through other channels. In short, the app developers’ behaviors are very limited.  

Apple continues to charge developers for services purchased within seven days of acquiring new customers through links in the Apple App Store. The European Commission has determined that these fees are inappropriate. With a new survey aim of Apple’s Core Technology Fee, the European Commission will open a new investigation into Apple App Store’s new terms. Since it’s only a preliminary investigation, Apple can defend itself before the final decision making public on March 25 next year. If Apple turns out to be illegal, it will face a fine of up to 10% of its annual global revenue. In the case of repeat offenders, this fine can be up to 20%. However, Apple may also not be fined if it can make changes that meet the requirements of EU rules.

Apple’s total revenue for 2023 reached $383.3 billion. Therefore, the company might receive a fine of close to $40 billion at a fine of 10 percent. So what’s the Digital Markets Act(DMA)? The Digital Markets Act is the EU’s law to make the markets in the digital sector fairer and more contestable. The Digital Markets Act (DMA) establishes a set of clearly defined objective criteria to identify “gatekeepers”. Gatekeepers are large digital platforms providing so-called core platform services, such as online search engines, app stores, and messenger services. Gatekeepers will have to comply with the do’s and don’t s listed in the DMA.

DMA is one of the first regulatory tools to regulate the power of the largest digital companies in the round. DMA complements do not change EU competition rules, which continue to apply fully. There are currently six companies eligible for the DMA, Google’s parent company Alphabet, Amazon, Apple, ByteDance, Facebook’s parent company Meta, and Microsoft, which are identified as “gatekeepers”. These are companies that dominate the digital market. The EU has also identified 22 core platform services for these tech giants.

DMA is believed one of the toughest laws targeting tech companies and is likely to mark a great change in the way the EU regulates digital giants. Instead of following the US, which waits for conclusive evidence showing monopoly behaviors harm consumer rights and interests, and then punishing companies under traditional antitrust laws, the EU has adopted the DMA to set rules. The rules require digital giants to open their systems to competitors. It makes the EU take the lead in regulating the digital market.

Many governments seem to be in favor of the EU’s ideas. Before the impact of AMD was fully assessed, many countries, including the United Kingdom and Japan, began to work on their versions of DMA. So will DMA play its role and bring us a fairer and more competitive digital market environment? Let’s wait and see.

By Le Tianyu