April 25, 2024
EU Announces Provisional Agreement on Digital Markets Act That Requires Apple to Allow Side Loading, Other Payment Systems

EU Announces Provisional Agreement on Digital Markets Act That Requires Apple to Allow Side Loading, Other Payment Systems

Posted March 25, 2022 at 2:42pm by iClarified
The European Council and the Parliament have announced a provisional political agreement on the Digital Markets Act (DMA), which will force Apple to allow sideloading, third party payment systems, and make iMessage interoperable. Work is ongoing to finalize the text of the Act in the coming days.

"The European Union has had to impose record fines over the past 10 years for certain harmful business practices by very large digital players. The DMA will directly ban these practices and create a fairer and more competitive economic space for new players and European businesses. These rules are key to stimulating and unlocking digital markets, enhancing consumer choice, enabling better value sharing in the digital economy and boosting innovation. The European Union is the first to take such decisive action in this regard and I hope that others will join us soon."
-- Cédric O, French Minister of State with responsibility for Digital

The proposed new rules are designed to prevent large companies that act as a 'gatekeepers' from abusing their position.

Which platforms are considered gatekeepers?
The Council and the European Parliament agreed that for a platform to qualify as a gatekeeper, firstly it must either have had an annual turnover of at least €7.5 billion within the European Union (EU) in the past three years or have a market valuation of at least €75 billion, and secondly it must have at least 45 million monthly end users and at least 10 000 business users established in the EU.

The platform must also control one or more core platform services in at least three member states. These core platform services include marketplaces and app stores, search engines, social networking, cloud services, advertising services, voice assistants and web browsers.

To ensure that the rules laid down in the regulation are proportionate, SMEs are exempt from being identified as gatekeepers, apart from in exceptional cases. In order to ensure the progressive nature of the obligations, the category of ‘emerging gatekeeper’ is also provided for; this will enable the Commission to impose certain obligations on companies whose competitive position is proven but not yet sustainable.

Gatekeepers will have to:
● ensure that users have the right to unsubscribe from core platform services under similar conditions to subscription
● for the the most important software (e.g. web browsers), not require this software by default upon installation of the operating system
● ensure the interoperability of their instant messaging services’ basic functionalities
● allow app developers fair access to the supplementary functionalities of smartphones (e.g. NFC chip)
● give sellers access to their marketing or advertising performance data on the platform
inform the European Commission of their acquisitions and mergers

But they can no longer:
● rank their own products or services higher than those of others (self-preferencing)
● reuse private data collected during a service for the purposes of another service
● establish unfair conditions for business users
● pre-install certain software applications
● require app developers to use certain services (e.g. payment systems or identity providers) in order to be listed in app stores

What if a gatekeeper does not play by the rules?
If a gatekeeper violates the rules laid down in the legislation, it risks a fine of up to 10% of its total worldwide turnover. For a repeat offence, a fine of up to 20% of its worldwide turnover may be imposed.

If a gatekeeper systematically fails to comply with the DMA, i.e. it violates the rules at least three times in eight years, the European Commission can open a market investigation and, if necessary, impose behavioural or structural remedies.

What if the platform does not agree that it is a gatekeeper?
If a platform has good arguments against its designation as a gatekeeper, it can challenge the designation by means of a specific procedure that enables the Commission to check the validity of those arguments.

Who makes sure that gatekeepers stick to the rules?
To ensure a high degree of harmonisation in the internal market, the European Commission will be the sole enforcer of the regulation. The Commission can decide to engage in regulatory dialogue to make sure gatekeepers have a clear understanding of the rules they have to abide by, and to specify their application where necessary.

An advisory committee and a high-level group will be set up to assist and facilitate the work of the European Commission. Member states will be able to empower national competition authorities to start investigations into possible infringements and transmit their findings to the Commission.

To make sure that gatekeepers do not undermine the rules set out in the DMA, the regulation also enforces anti-circumvention provisions.

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EU Announces Provisional Agreement on Digital Markets Act That Requires Apple to Allow Side Loading, Other Payment Systems
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