• by Laurie Sullivan  @lauriesullivan, March 25, 2024

The European Union, which is testing a new digital law, recently announced investigations into Apple, Google, and Meta for potential violations of the Digital Markets Act (DMA).

The DMA legislation is designed to ensure large online platforms deemed to be gatekeepers behave in a fair way to create a fair and open environment for online businesses. Six gatekeepers have obligations under the DMA. Google's parent company Alphabet, along with Apple, Amazon, ByteDance, Meta, and Microsoft have some form of obligation to the DMA.

European residents have complained about privacy implications for U.S. technology for years. Now, the EU has begun to take action on the legislation.

Greg Sterling, co-founder of Near Media, believes Google attempted to redefine its local services as one way to abide by the DMA legislation. He wrote about three ways that Google reframed its compliance. One is focused on “positioning itself as stuck in the middle of competing Supplier and Aggregator factions, both of who want more traffic.”

The investigation into Apple, Google, and Meta, which is expected to last 12 months, reports five possible violations between the companies. The most interesting focuses on Meta and its “pay or consent” model, which in Europe gives users the option to either pay a monthly fee or consent to having their personal data used for ad targeting. 

The EU is investigating whether or not the “pay or consent” model complies with Article 5(2) of the DMA that requires gatekeepers to obtain consent from users when they intend to combine or cross-use their personal data across different core platform services.

Apple, the DMA said, does not allow apps to openly communicate with users and form contracts with them, and does not offer users enough choices.

Google does not allow apps to freely communicate with users and form contracts with them. And Meta asks individuals to pay to stop their data from being used for ads.

Strict penalties could become the consequence of non-compliance. Fines up to 10% of the company’s total worldwide annual revenue, or up to 20% in the event of repeated infringements, or the periodic penalty payments of up to 5% of a company’s average daily revenue. The companies could divest the part of the business in question to avoid the penalty.

The EU is also looking into Amazon having preference of its own brand products in the Amazon store, and Apple's new fee structure and other terms and conditions for alternative app stores and distribution of apps from the web such as sideloading that may be defeating the purpose of its obligations under Article 6(4), the statement said.

The UK is in the process of implementing a similar bill that will align UK and EU law. It's called the Digital Markets, Competition and Consumers Bill, according to one media outlet.