Apple and Google under pressure as EU approves Digital Markets Act

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The European Union has approved two new pieces of legislation that are expected to disrupt the way online services and platforms operate in the region, with Apple and Google expected to be among the most affected.

The European Parliament has now passed the Digital Services Act and the Digital Markets Act, which together are described as the “first comprehensive regulation for the online platforms we all depend on in our lives”.

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Both will be applicable across the EU, including for businesses not based in the region.

Initially proposed in December 2020, the acts will now be formally adopted by the Council of the European Union and then published in the Official Journal. They will enter into force 20 days after their publication, according to estimates, in the fall of 2022.

The legislation is far-reaching and affects everything from hosting and intermediary services, such as internet service providers, to online marketplaces and ‘very large online platforms’.

In the EU announcement, Margerethe Vestager – executive vice-president for a Europe fit for the digital age – said: “Major platforms will have to refrain from promoting their own interests, sharing their data with other companies, allowing more app stores. Because with size comes responsibility – as a big platform, there are things you have to do and things you can’t.

Internal Market Commissioner Thierry Breton added: “Ten years ago a page was turned on ‘too big to fail’ banks. Now, with DSA and DMA, we are turning the page on ‘too big to care’ platforms. »

The full impact on video game companies is yet to be determined, but of particular note is the expected effect on Apple and Google, both of which have defended their mobile ecosystems against a variety of antitrust lawsuits and investigations over the course of the year. of recent years.

“Ten years ago, a page was turned on ‘too big to fail’ banks. Now, with DSA and DMA, we are turning the page on ‘too big to care’ platforms”

Thierry Breton, European Commission

As covered earlier this year, the Digital Markets Act will, among other things, require platform holders to allow users to sideload apps and install software through means other than official stores.

It will also prevent holders of platforms like Apple and Google from blocking payments through third-party systems to ensure that they receive their commission on all transactions, which is usually 30%.

Both rules address some of the issues raised by Epic Games in its numerous lawsuits against Apple and Google. The Fortnite developer was largely defeated in its 2020 US court case; it’s only win — the ruling that Apple must abandon its anti-management practices — has been stopped while the iOS firm continues to appeal the decision.

The Digital Markets Act Explained

The DMA is a set of rules and regulations specifically for large online platforms that the EU considers a “gatekeeper”.

A custodian is a business that:

  • has a “strong economic position” and a “significant impact” on the EU internal market
  • has a “strong intermediation position”, which means that it connects a large number of companies to a large audience
  • has or will have a “well-established and durable position in the market”, which means that it meets the two criteria above for three consecutive financial years

Once the DMA is in effect, the European Commission will assess which companies qualify as gatekeepers, a process that will involve companies submitting information indicating whether or not they meet the criteria.

The Digital Markets Act is set to force big changes to Apple’s App Store

If a business is designated as a custodian, it will have six months to comply with the new rules.

Non-compliance can result in fines of up to 10% of the company’s worldwide annual revenue, up to 20% for repeat violations, and penalty payments of up to 5% of revenue global business daily.

Among the do’s and don’ts for sitters most relevant to the gaming industry – and in particular companies like Apple and Google – are:

  • They to have to allow users to install third-party apps or app stores that use or interact with the Portal’s operating system
  • They to have to allow users to easily uninstall pre-installed apps or change default settings on operating systems, virtual assistants and web browsers that direct them to the Guardian’s own products and services
  • They to have to allow businesses that use the Guardian’s platform to promote external offerings and enter into contracts with customers outside of the platform
  • They must not requiring app developers to use certain services provided by the Guardian, such as payment systems, in order for their software to appear in the Guardian’s app store
  • They must not use all data for business users who compete with them or their own platform

On its website, the European Union said the DMA “aims to prevent gatekeepers from imposing unfair conditions on businesses and end users and to ensure the openness of important digital services.”

The Digital Services Act Explained

The DSA has a much broader remit as it targets all businesses, from internet service providers and domain name registrars to very large online platforms (classified as those which have “significant societal and economic impact” and at least 45 million users in the EU).

Affected businesses will include online marketplaces, app stores and social media platforms.

The new rules focus on protecting users from illegal content, improving reporting processes and giving users new and expanded complaint rights.

It also prohibits certain types of targeted advertising on online platforms; for example, targeting children or using special categories of personal data – such as ethnic origin, sexual orientation or political opinions – to reach certain audiences.

The Digital Services Act has been designed in full compliance with existing rules, such as the GDPR and the ePrivacy Directive, to protect personal data.

Companies and platforms affected by the DSA that fail to comply will face penalties, including financial fines, and in the most serious cases, will be fined up to 6% of their global turnover.

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