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EU ruling aims to stop market domination from Big Tech giants

A new EU law dubbed the Digital Markets Act will aim to stem the relentless market domination of Big Tech’s giants. This will, in theory, provide smaller online businesses with a chance to grow.

As much as we’d love it to be, the world just isn’t an equal opportunity place, is it? Ah well, at least our phones are always there to provide a bit of escapism, complete with all of our favourite apps – also run by a handful of wealth hoarding conglomerates. Sigh.

Finding digital entertainment or dabbling in e-commerce is almost impossible these days without somehow handing revenue or data to one of Meta, Apple, Google, Microsoft, or Amazon, among a few others.

These Big Tech giants quite literally dominate the market, and as their success perpetually grows, it narrows the window of opportunity for small-to-medium sized companies to succeed or sprout at all.

In lieu of avoiding a complete industrywide shutout, the EU is hoping its Digital Markets Act (DMA) can level the playing field somewhat beyond just the ‘gatekeepers’ of the tech industry. Who doesn’t enjoy a bit of healthy competition?

Put simply, the DMA is a legislation specifically focused on limiting the market power of the world’s biggest tech companies. It had previously been suggested that this could be enforced by October, but Spring 2023 now appears more likely.

It is broadly described as an ‘anti-trust’ law, which means that any indiscretions from the companies in question will be punishable by hefty sanctions. Depending on the level of offence, up to 10% of an entire year’s revenue may be charged.

This could severely disrupt and shakeup the current business models used by the world’s tech behemoths, though we haven’t seen the full set of stipulations yet.

We do know that self-preferential behaviours will be heavily targeted. This would mean that Google, for instance, may not be able to legally display its own products alongside the results of a Google search once this comes into effect.

If someone were to search for a digital assistant on Amazon, theoretically, the e-commerce giant wouldn’t be able to push its Alexa product above the Google Home or Apple HomePod. Strange, eh?

There are also suggestions that Apple could be required to allow users to download apps from outside the App Store for the first time ever. CEO Tim Cook is said to be vehemently against the idea. Shocking!

Within the social media realm, it could be feasible that Facebook will be prohibited from reusing user data obtained from WhatsApp or other subsidiaries.

The types of mechanics we’ve just discussed intend to keep users within one company’s networks and they’re called ‘bundling practices.’ These will make up a big chunk of the considerations in the DMA.

In terms of who qualifies as a ‘gatekeeper,’ the small print specifies that online companies with market capital over $82bn and upward of 45 million users will have to adhere to new standards.

These companies have three months to declare their status with the EU Commission, once the DMA gets final approval from Parliament. Failure to register could result in reparations if authorities catch wind.

You may think that this sounds somewhat drastic and abrupt, but it has been in the works for some time. It’s also indicative of where Big Tech is headed and how fast it needs regulating.

Moderately sized and independent companies have long been ousted from online markets by those making tens of billions per quarter from digital advertising. At this stage, the rankings are established and those at the top rule 99% of what we see and do.

Even with the DMA in place, the playing field will be far from even, but this at least provides burgeoning businesses and start-ups with a chance to grow.

‘It’s a progression,’ says  Farhad Divecha, managing director of digital marketing agency AccuraCast. ‘It appears to be much more broad-based regulation in terms of the impact specifically on the tech giants than what we’ve seen so far.’

 

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