Technology: Digital Markets Act will be detrimental to apps like WhatsApp the most.



Since the beginning, the greatest threat to the dominant Big Tech companies has been regulation, not the competition of upstarts. In the last week, it was reported that it was announced that the European Union (EU) finally came to an agreement on a landmark bill for regulating “digital gatekeepers”, which includes search engine giant the holding firm of Google Alphabet Inc, social media giant Facebook’s owner Meta Platforms Inc, as the e-commerce giant as well as iPhone manufacturer Apple Inc. On March 24, the continent’s three governing institutions comprising The European Commission, European Parliament and the 27 member states, reached an agreement on the final language of the Digital Markets Act (DMA) that they’d been negotiating for two years. The decision to approve the legislation by the European Parliament in late June is now considered an unimportant formality. The new law is expected to be approved in October and will take effect next year. The top tech companies based in the United States are expected to make appeals to stop its immediate introduction.

Yet, despite delays by the courts in implementing the regulation, it is evident that revolutionary European law will transform the way tech companies operate worldwide. It will be more difficult for the giant platforms to complete major acquisitions such as Amazon’s recent acquisition of Hollywood film studio MGM or Google’s acquisition of YouTube, or Facebook’s purchase of WhatsApp and Instagram. Additionally, it is that they will no longer have the ability to leverage data to drastically increase their businesses or deter emerging competitors in the same way that Facebook attempted to slow-growing Snapchat’s owners, Snap Inc. And while the new law won’t dismantle Big Tech as many detractors would like, it will make it more difficult for Big Tech platforms and allow smaller, agile players to compete successfully on an equal playing field.

The main goal for DMA’s primary goal DMA is to ensure “contestable, fair and transparent markets” in the digital industry, according to the socialist Danish politician as well as European Commission vice-president and digital chief Margrethe Vestager, who helped in directing Europe’s response towards the increasing power that is Big Tech.

Europeans are no longer required to use Google as their sole web search, WhatsApp as their messaging platform, or Instagram as their main social media platform because they’re the most well-known. “There are several major companies that have many users and take that to benefit from using the platform,” Czech member of the European Parliament Marcel Kolaja told journalists last week. “So people don’t sign up to the service simply because they believe it’s the best but because it’s most popular and is the place where they meet most of their acquaintances or business partners.”

These new European regulations will result in a major global impact. Since the internet is an interconnection of various worldwide internet networks, any rules one nation or, in the case of any group of countries, such as the EU, is applying to the usage of its network eventually will affect all countries connected to the internet’s global network. European authorities are well aware of their regulations’ effects worldwide. You may recall that around four years, in May 2018, Europe started implementing the privacy-enhancing General Data Protection Regulation (GDPR). American and Asian firms that conducted trade in Europe and were European customers were required to comply with these regulations.

The DMA will not be able to restrict “gatekeepers” such as Amazon, Apple and the owners of Google and Facebook; however, it would also apply to any technology platform that has EUR7.5 billion (US$8.37 billion (or RM35.2 billion) in annual revenue and the total market value in the region of EUR75 billion. To qualify as a “digital gatekeeper,” the tech companies must be able to count at least 45 million active users per month within Europe and 10,000 annual business users. The discussions concerning the DMA continued for months, and governments were sharply divided over how to define what is included in the DMA and what is excluded.

States that are members of the EU disagreed on what constitutes the definition of a digital platform. At the last moment, the EU included web browsers and voice assistants within the scope of “core platform services”; however, it excluded connected TVs, such as Roku’s Roku, in the size of the legislation. Failure to comply with DMA regulations could result in a fine of up 20 per cent of the digital gatekeeper’s global revenues in the event of repeated violations. Amazon, in the last year, had revenues of $469 billion. If the EU decides that Amazon does not comply with its regulations, it could issue a US$93.8 billion penalty on the online retailer.

It’s not only the massive fine that’s the issue. It’s entirely on the tech platforms worldwide to prove they’re innocent and weren’t intentionally blocking competition, instead of the European regulators arguing that tech giants operate with unjust business models. Then the proof in a court like was the case with the US Department of Justice was required to do in its antitrust lawsuit with Microsoft Corp in 2001. In 2001, DoJ brought Microsoft to court over illegally keeping its monopoly status on the world market for personal computers (PC) market, primarily due to the legal and technical limitations it imposed on the PC manufacturers and users to deinstall their Internet Explorer web browser and make use of other browsers like Netscape.

While the US is currently pursuing its antitrust cases concerning Google, Facebook, Amazon and Apple, Washington has cried at lawmakers in the newly passed European law. US Commerce Secretary Gina Raimondo recently urged the EU not to “discriminate” against US companies to “ensure the European and other rivals” of US technology platforms are included in the law. “The regulatory initiatives on both sides of the Atlantic mustn’t be causing unintended negative consequences, like accidental cybersecurity threats or negative impacts to technological innovation”, an earlier US government document on Europe’s DMA stated. US officials have said that the EU intentionally increased the cap on market value and revenue thresholds for companies that adhere to the DMA to safeguard the continent’s firms. European lawmakers and regulatory bodies have said that the main goal of DMA DMA is to stimulate the European economy and protect the rights of European investors and consumers.

Which companies are most affected?

Who will be most affected, and in what way? The DMA will stop Amazon from using data it gathers from third-party transactions to sell its private-label products. This DMA’s “self-preferencing” restrictions will also prevent Google from putting its shopping services in its search results. The law will require users of Apple’s iOS and Google Android smartphones to permit tablet and smartphone users to remove any downloaded apps, including the original app stores. If the law is enacted and the law is implemented, you will not have just the Apple’s app store for iPhone but also other app stores on iPhone as well as other rival apps, the same way your Android phone may be equipped with Apple’s App Store, as well as several other stores. This would be like having a dozen cumbersome apps instead of one curated department store on your phone.

With the App, Store developers will not have to utilize Apple Pay or Google Pay platforms and identity functions. Still, they can choose to be able to “sideload” their applications and avoid the charges of these platforms. Sideloading permits the distribution of applications outside of closed systems, like apple’s App Store. It is a new process that allows for the distribution of apps outside closed systems, such as European digital rules will require platforms such as Google to give publishers and advertisers access to the pricing conditions and algorithms they employ, in addition to the European Commission’s initial access requirement about the advertising portfolio. It will help break Google’s ad and adtech monopoly that lets it determine prices and manipulate auctions of ads to benefit.

This DMA will also require platforms like Amazon to give companies that sell their products on its e-commerce platform access to all of the data they collect there and data analyses of their products. This new European digital legislation will require platforms targeting ads using personal data to seek “explicit permission” from their customers. Facebook and other media have compelled Apple to get this consent. Still, this DMA will make obtaining customers’ consent obligatory for all platforms that collect personal information for targeted advertisements.

Apple might stand a great possibility of circumventing the rules regarding sideloading provided it is willing to make concessions regarding various aspects of its App Store, including payment options and its 15 up to 30 per cent in-app purchases. Washington has expressed serious concerns over the DMA’s effect on “security” and has warned that certain obligations could lead to security vulnerabilities online, particularly the practice of “sideloading”. Apple, for its part, Apple declares that the new law could compromise its security and permit malicious actors to benefit from sideloading. Last year, Apple Chief Executive Tim Cook said that the DMA’s ban regarding sideloading limitations would “destroy the security of the iPhone” and let the users get “tricked and forced to download apps from app stores owned by third parties through imitation apps and other techniques”. Cook pointed out that the governments and international agencies across the globe “have specifically recommended against sideloading restrictions, that could jeopardize security and privacy protections consumers have been conditioned to”.

Security issues

The most significant effect of DMA is likely to be felt on the two main messaging platforms: Apple’s iMessage and iMessage, which is by far the most popular within North America, and its main rival, Meta Platforms’ WhatsApp, which is a significant player in the world outside of America. Facebook purchased WhatsApp for $19 billion in 2014. The DMA will force messaging applications like WhatsApp to allow interconnection with other messaging platforms, as does email is interconnected across various services. You can currently contact me via email using my Hotmail account with my Google Gmail account. I usually use my Apple iMessage device to transmit messages to my family members, friends, and even contacts from businesses within North America. However, for my friends in Asia, I am forced to use WhatsApp since many of them don’t possess an Apple device.

In the coming calendar year, WhatsApp and iMessage customers will be able to communicate with those using other messaging services, including Signal or Telegram. Telegram as well. Signal users will be capable of sending messages to WhatsApp users. WhatsApp user. But, the interoperability of messaging platforms will be restricted to competitors for one-to-one conversations between users and not for chats in groups, at least for the next four years. Therefore, if you’re in an existing WhatsApp chat room, you’ll be able to chat with me via iMessage if the DMA becomes law, but it won’t be possible for you to ask me to join the group for at most four years. In the same way, there’s the issue of interoperability between social media platforms such as Instagram, Snap and Pinterest. However, forced interoperability is likely to compromise the security of messaging.

Two main ideas are currently holding influence among European regulators, says an influential technology blog, Casey Newton. “One idea is that they ought to be more competitive against tech giants, and the best method to achieve it is through requiring their products to cooperate with other services,” he says. Another he says is that the privacy of data users is of the utmost importance, and any data shared between businesses should be treated with the utmost suspicion. The two views are not compatible. Because EU regulators are eager to go ahead with their regulations, the future of end-to-end encryption is at stake.

If the DMA is implemented, messaging using WhatsApp and iMessage is not completely secure. “The possibility of communicating privately in the midst of growing surveillance and retention of data is of crucial significance to the majority users,” notes blogger Newton. “Europe’s simultaneously pursuing increased competition and the highest level of privacy for its users is a clear example of one hand being unaware of what the other is up to. Any proposed solution could expose new risks in the areas of privacy, misinformation hate speech, and other risk areas.”

Big Tech needed to be controlled. However, the European Union’s new DMA might be a clear example of overreach by regulators. It could cause a plethora of problems using messaging platforms that are insecure because they’re forced to cooperate. The world requires more secure messaging systems, not interoperability.


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