This article was originally published on LinkedIn. Robert Wildner, CEO of AVOW discusses how the EU’s Digital Markets Act (DMA) has significantly reshaped the digital landscape by breaking Google and Apple’s monopoly on Europe’s mobile app economy, enabling alternative app stores, and offering consumers more choices, while facing ongoing challenges and scrutiny, particularly with Apple’s compliance issues.
Photo by Rodion Kutsaiev on Unsplash
For the great 18th-century German thinker Hegel, the passage from ignorance to wisdom occurs imperceptibly, like an owl flying “by night.” So when people say that “things don’t change overnight,” I often frown. Of course, they do! Just look at the EU’s Digital Markets Act (DMA). Having launched in March, its achievements thus far include: ending Google and Apple’s stranglehold on Europe’s mobile app economy; allowing alternative app stores on Android and iOS; empowering third parties to advertise their services in-app, and giving consumers greater choice over which apps come preloaded on their new phones.
Still not convinced the DMA has achieved much? You might want to continue reading this update, as June was another bumper month for the DMA. From the EU flexing its legislative muscles to the first wave of alternative app stores and the trend for DMA-style legislation elsewhere in the world, the summer sun brought with it textbook examples of how the EU’s flagship antitrust law is reshaping the digital landscape.
Once bitten, twice shy? Apple’s European Woes Mount
The biggest story in June is that the European Commission (EC) ruled that Apple breached the DMA by preventing “app developers from freely steering consumers to alternative channels for offers and content.”
Specifically, the EC’s preliminary investigation, launched in March, found that the iPhone manufacturer had obstructed developers from doing so in three ways:
- i) by stopping them from promoting their services within Apple App Store apps;
- ii) by only allowing third-party apps to promote their services via website “link-outs,” iii) by charging developers prohibitive fees.
Apple now has 12 months to put things right. If not, it could face a fine of up to 10% of its global revenue.
Additionally, the EC also announced that it is launching a separate investigation over concerns that Apple’s new fees for third-party developers and alternative app stores, including its Core Technology Fee, don’t meet Europe’s standards.
Given that the Silicon Valley giant is defending itself against antitrust charges in the US as well, things are not looking good for Apple. Moreover, this move by the EC should also quell fears that the EU won’t enforce its rules. The question is, will Apple learn from this or continue to defy Europe? Only time will tell.
Photo by Gilles Lambert on Unsplash
Up and Away: the DMA’s Triumph Continues
While the sunny weather here in Berlin has been hit-and-miss, the DMA’s fortunes have been consistently good. In June, the Verge reported that four new alternative app stores launched on Apple’s App Store. These included AltStore Pal, SetApp Mobile, Mobivention, and Aptoide, an app store based in Lisbon, Portugal, which began its iOS journey with a gaming-specific version of its store.
Like Altstore and SetApp, Aptoide has attempted to alleviate the burden of Apple’s fees, in their case, by transferring the cost (50 cents EUR per installation of its app store) to developers charging for in-app purchases. It’s an innovative scheme, but ultimately a sticking plaster for Apple’s fees—an issue the EU will hopefully resolve. Nevertheless, this influx of alternative app stores on the iPhone’s ecosystem is a significant improvement for developers.
The other good piece of news last month was that, despite industry scaremongering about the legislation, the DMA hasn’t hampered the tech sector’s revenues. According to a report by the investment bank Evercore, Apple’s EU App Store revenue increased by 28% in March and 22% in April. Of course, as Quartz notes, if the EU legislates against Apple’s fees, things could change. But overall, the outlook on the DMA is positive, even if Tim Cook’s company has chosen to delay the rollout of AI-features for its phones until early next year due to the DMA’s “interoperability requirements.”
Photo by NordWood Themes on Unsplash
The Butterfly Effect: the EU’s Antisteering Laws Spread their Wings
As I’ve noted in previous blogs, the DMA’s global popularity has increased, with both Brazil and the UK looking to adopt their own versions. Well, last month, the British parliament finally passed its anti-monopoly legislation, which will come into force this fall. As a result, commentators both for and against have begun offering interesting perspectives on the subject, looking to the DMA’s perceived successes or failures in Europe as a means of gauging its suitability elsewhere.
In Competition Policy International’s study of the UK’s DMA, for instance, the authors examine how Apple has reacted to the EU’s DMA, noting the various ways in which the company has attempted to wriggle out of complying with these rules by citing “security concerns.” Conversely, this report from TechPolicy assesses the transferability of the DMA to Brazil and analyzes concerns in Europe that either the EU doesn’t go far enough or will stifle innovation.
While these excellent perspectives offer food for thought, they also reflect a common trend in DMA-related discourse, which tends to forget the most important thing: the consumer. As Tan Eroğlu at Emerging Europe argues, while breaking up monopolies in the digital economy is imperative everywhere, the priority really should be giving phone and app users greater choice—exactly what the DMA has so far delivered!
And that’s it for another month. See you in August.
— Robert.
This article was originally published on LinkedIn.