EU’s Digital Markets Act (DMA) gives an edge to Big Tech’s smaller rivals

EU's Digital Markets Act (DMA) gives an edge to Big Tech's smaller rivals
EU's Digital Markets Act (DMA) gives an edge to Big Tech's smaller rivals

As the world’s leading IT firms restructure their core web services to comply with the European Union’s major Digital Markets Act (DMA), smaller competitors and even coworkers may gain a competitive advantage.

As the world’s largest IT businesses rework their key online services to comply with the European Union’s major Digital Markets Act (DMA), some smaller rivals and even colleagues may gain a competitive advantage.

The DMA is Europe’s attempt to rein in Alphabet’s (GOOGL.O); it opens a new tab. Google, Amazon (AMZN.O), Apple (AAPL.O), TikTok owner ByteDance, Meta Platforms (META.O), and Microsoft (MSFT.O) all establish a fair playing field for smaller rivals, resulting in greater competition for Europeans.

The broad legislation requires some of the world’s largest technology businesses to make it easy for consumers to select services from several providers.

“The winners will be small European businesses, which will have more options and visibility than large corporations,” said Christophe Carugati of consultancy Digital Competition.

For example, Meta must make its Facebook Messenger and WhatsApp services compatible with qualifying competitors, as long as they meet the company’s technological and security requirements.

In fact, this implies that users of other messaging applications, such as Signal and Telegram, which have gained popularity globally for their emphasis on user privacy, may soon be able to speak with Messenger and Whatsapp friends without switching apps.

Meta states in its compliance report that it is striking a balance between developing a feasible approach for third-party providers interested in becoming compatible with Meta and maximizing user security, safety, and privacy.

Similarly, users of Google’s (GOOGL.O) new tab Android phones will be given the option of selecting a default search engine when they set up their device, creating significant potential for competitors such as privacy-focused DuckDuckGo and environmentally sensitive Ecosia.

“The implementation of these new rules is a step in the right direction, but the proof of the pudding is always in the eating and whether we see any meaningful changes in market share,” Sophie Dembinski, public policy chief at Ecosia, stated.

Google announced in a blog post this week that changes to search results will result in more traffic for huge middlemen and aggregators, while hotels, airlines, shops, and restaurants will receive less.

Consumers in the EU have also gained greater privacy rights as the DMA implements new regulations governing how these firms handle their data.

Users can, for example, unlink their Facebook and Instagram accounts, preventing information from being shared between platforms for tracking and targeting purposes.

While the DMA opens up new channels for smaller competitors to reach customers, the existing tech behemoths may see their market share erode.

Apple (AAPL.O), which opens a new tab, stands to lose the most from the DMA, which requires it to open up its profitable App Store, an opportunity that big tech competitors and smaller start-ups alike will undoubtedly seize.

The DMA requires Apple to allow software developers to offer their programs to EU users outside of its own App Store.

Apple has warned that updates to its iOS mobile operating system, Safari web browser, and App Store pose new dangers to users and developers, potentially including new pathways for malware, fraud and scams, unlawful and dangerous content, and other privacy and security threats.

Apple’s detractors claim it is mainly concerned with protecting its earnings since it earns a 30% fee on in-app sales.

The new regulations’ adoption coincides with an intensification of a feud between Apple and Fortnite creator Epic Games, one of its longtime opponents.

Fortnite had planned to develop its own app store on iPhones and iPads in the EU, according to the DMA. However, on Wednesday, Apple deleted a fresh developer account that Epic had established in Sweden. In reaction, Epic accused Apple of removing one of its most significant potential competitors from the Apple App Store.

The Commission has requested an explanation from Apple and considers the matter to be a priority, potentially serving as a test case for the new guidelines.

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