Google should become fairer and Apple should open up its smartphones to the competition. The new regulation has it all.
What happened? When consumers buy a new smartphone, they have no choice: many apps are pre-installed. And if you google, you will first find products from Google itself. The EU Commission now wants to change that. Consumers and companies are too dependent on a few technology giants. This is bad for the competition and expensive for consumers.
Legend: apps that hardly any smartphone can do without. Because the competition is deliberately hindered? Shutterstock/Mirjam Almasy
The EU Commission today published a list that is quite difficult: All companies that are on it fall under the new regulation of the so-called Digital Markets Act. The EU has appointed so-called gatekeepers. Companies that are so big that you can’t get around them if you do business digitally. Six tech companies are on the radar: Alphabet or Google, Microsoft, Amazon, Apple, Meta or Facebook and the Tiktok operator Bytedance.
The dominance of tech companies harms consumers and startups
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According to the European Commission, the big tech companies are exploiting their market power because consumers and companies cannot avoid them when they do business with each other. With its search engine, Google has a global market share of around 90 percent and prioritizes its own products in search results and on Google Maps. And with Apple smartphones, apps have to be purchased from Apple’s own store. This harms consumers, who have less choice and pay higher prices. Small businesses and startups are also suffering because they are less visible. And are struggling to compete with the big tech companies with their own apps or products. In addition, they cannot avoid advertising through the big tech companies.
How will the market power of the technology giants be limited?
Apple, for example, has to open up its smartphones to the competition’s app stores. Google is no longer allowed to favor its own products in the search results and on Google Maps. This also applies to Amazon; the tech group must stop evaluating data from the competition in order to give preference to its own products. Facebook is not allowed to collect cross-platform data in order to place even more targeted personalized advertising.
The big regulatory package of the EU: What do DMA and DSA mean?
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The Digital Markets Act (DMA), together with the Digital Services Act (DSA), is part of a large regulatory package from the EU.
At the DMA is about strengthening competition in the digital economy. The affected tech companies must contact a Series of bans and requirements of the EU Commission hold, which should ensure that the market power of the tech companies is limited. Own products may no longer be favored and hurdles for the competition must be removed. With the DMA, the EU Commission is intervening in the strategy of the tech companies. The DMA came into effect on November 2, 2022. Today, September 6th, the tech companies that will fall under the regulation have been identified and companies now have until March 2024 to implement the rules. Violations can result in fines of 10 to 20 percent of global annual sales.
At the DSA The point is that the tech companies concerned must ensure that no disinformation, hate speech or illegal content such as child pornography is uploaded to their social media, marketplaces and app stores. The DSA has been in force since November 2022 and has been legally binding for the large tech companies since August 2023.
What happens if Google and Co. don’t follow the new rules? The big tech companies now have six months to implement the new rules. Violations can result in hefty fines of 10 to 20 percent of global annual sales. In the case of Google, for example, this is up to 56 billion euros. That roughly corresponds to the annual profit, which even an online giant like Google can’t easily put up with.
How are the big tech companies fighting back? The EU expects a veritable wave of lawsuits. Some tech companies are fighting for exceptions and want to get at least partially off the dreaded list. And the tech companies argue that the new regulation harms the privacy and security of users and undermines the intellectual property of the tech companies.
However, the chances of asserting oneself legally against the EU are not very high. And half a year isn’t a lot of time anyway. So Big Tech would do well to prepare anyway, for March next year; because from then on the new rules will apply, regardless of the status of the legal processes.
What does that mean for us in Switzerland? It is not yet clear whether the Swiss will also benefit from the new EU rules. Because the new regulation only affects the territory of the European Union. However, it is often the case that the large tech companies see Switzerland as part of the European market and adapt accordingly in Switzerland. From next year it could be the case in Switzerland too that Google will no longer favor its own products when searching, or that Apple users will be able to buy apps on their smartphones wherever they want. Maybe even at a lower price.