Brussels is determined to break down the garden walls of internet giants like Apple, which have created closed ecosystems that limit the choice and access of consumers and competitors. The European Commission, the executive branch of the European Union, has proposed a new regulation, called the Digital Markets Act, which aims to open up the digital markets and ensure fair and transparent competition.
The regulation, which was announced in December 2020, targets the so-called “gatekeepers”, the large online platforms that have a significant impact on the internal market and the lives of millions of users. The regulation defines a set of criteria to identify the gatekeepers, such as the number of users, the revenues, the market share, and the network effects. The regulation also lists a set of obligations and prohibitions for the gatekeepers, such as allowing users to uninstall pre-installed apps, enabling interoperability with other services, and refraining from using data from third parties to compete with them.
The regulation, which is still under discussion and negotiation, could have a major impact on the business models and practices of the tech giants, especially Apple, which has built a loyal and lucrative customer base around its devices and services, such as the iPhone, the iPad, the App Store, and Apple Music. The regulation could force Apple to loosen its grip on its ecosystem, and allow more choice and innovation for consumers and developers.
A Long-Standing Dispute Between Apple and Its Rivals
Apple, which is one of the most valuable and profitable companies in the world, has been facing criticism and complaints from its rivals and regulators for years, over its alleged anti-competitive and abusive behavior. Apple, which charges a 30% commission on the sales of apps and digital content on its App Store, has been accused of favoring its own apps and services, and of stifling the competition and innovation of other players.
One of the most prominent and vocal critics of Apple is Spotify, the Swedish music streaming service, which filed a complaint against Apple with the European Commission in 2019, claiming that Apple was using its dominant position and unfair practices to disadvantage its competitors and harm consumers. Spotify, which competes with Apple Music, argued that Apple was imposing a “tax” on its app, which forced it to either raise its prices or lose revenue, and that Apple was limiting its access and exposure to users, such as by blocking its integration with Siri and HomePod.
Another critic of Apple is Epic Games, the American video game developer, which sued Apple in 2020, after Apple removed its popular game Fortnite from the App Store, following a dispute over the payment system. Epic Games, which competes with Apple Arcade, claimed that Apple was violating antitrust laws and operating a monopoly, and that Apple was restricting the freedom and creativity of developers and consumers. Epic Games, which also sued Google for similar reasons, launched a campaign called “Free Fortnite”, which rallied the support of other developers and gamers.
A Potential Game-Changer for the Digital Economy
The Digital Markets Act, which is part of the European Commission’s broader digital strategy, is expected to be a potential game-changer for the digital economy, as it could reshape the balance of power and the rules of the game for the online platforms and their stakeholders. The regulation, which could be adopted by 2023, could also set a precedent and an example for other regions and countries, such as the United States, which have been grappling with the challenges and opportunities of the digital transformation.
The regulation, which is based on the principle of fairness and openness, could benefit the consumers and the competitors of the gatekeepers, as it could offer them more choice, access, and innovation, and lower prices and fees. The regulation could also benefit the gatekeepers themselves, as it could enhance their trust and legitimacy, and foster a more sustainable and diverse digital ecosystem.
The regulation, however, could also face some challenges and limitations, such as the complexity and uncertainty of its implementation and enforcement, the resistance and lobbying of the gatekeepers and their allies, and the dynamism and evolution of the digital markets and technologies.
