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Major tech giants, predominantly American, have been identified by the European Commission as “gatekeepers” to be regulated under the new Digital Markets Act (DMA).
What Happened: The European Commission declared on Tuesday that tech mammoths such as Alphabet Inc. (NASDAQ:GOOG), Amazon.com Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Meta Platforms Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), and China’s ByteDance Ltd. are to be monitored under the DMA. They have until March 2024 to comply with the new regulations.
The DMA is designed to limit the market dominance of these tech companies. It requires them to compete based on the merits of their products and services. Major messaging apps will need to ensure their platforms are interoperable with competitors, and operating systems must support third-party app stores and alternate in-app payment options.
Microsoft’s Bing search engine, Edge browser, and advertising service are not on the list but are under investigation to see if they meet the criteria for regulation. Apple's iMessage service and iPadOS are also under scrutiny.
Companies are categorized as gatekeepers if they have an annual turnover of over €7.5 billion in Europe, a market cap of over €75 billion, and a service with over 45 million monthly active users in the EU. Those who fail to comply could face fines of up to 10% of their total worldwide turnover or as much as 20% for repeat offenders.
Why It Matters: The DMA has been in the pipeline as part of the EU’s efforts to curb the influence of tech giants, as revealed in a series of European Commission press releases. The goal is to foster competition and prevent monopolistic practices. The DMA could significantly alter how these companies operate in Europe, impacting their business models.
However, these companies have expressed concerns about the DMA’s potential impacts. Apple, for instance, voiced concerns about the privacy and security risks the DMA poses, indicating that they will focus on mitigating these impacts while continuing to serve their European customers.
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