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Big Tech's core businesses face overhaul under EU tech rules

[September 06, 2023] By Supantha Mukherjee

STOCKHOLM (Reuters) -The EU Commission on Wednesday designated 22 services of six major tech companies as "gatekeepers" of online services providing messaging to video sharing in its latest crackdown on Big Tech.

The firms are Alphabet, Amazon, Apple, Meta, Microsoft and TikTok owner ByteDance.

Under the DMA, which came into force in November, companies with more than 45 million monthly active users and a market capitalization of 75 billion euros ($82 billion) are considered gatekeepers providing a core platform service.

Businesses labeled as such will be required to make their messaging apps interoperate with rivals and let users decide which apps to pre-install on their devices.

Alphabet's Google had the highest number of services, including Android operating system, Maps and Search, which would face tougher rules. Meta's Facebook, Instagram, Marketplace and WhatsApp also qualified as gatekeepers.

The companies will have six months to demonstrate their compliance with their obligations and can be fined up to 10% of their annual global turnover for DMA violations.

Gatekeepers could ask for an interim measure to suspend the application of the rules but they would need to launch a legal case in the EU Court of Justice in Luxembourg to do that, a senior Commission official said. "We haven't seen anything like that so far."

Following the introduction of separate legislation, the Digital Services Act, Zalando took the Commission to court in June.

"It's D-Day for #DMA!," EU industry chief Thierry Breton said on X, formerly known as Twitter. "The most impactful online companies will now have to play by our EU rules."

A Microsoft spokesperson said it accepts its gatekeeper designation, while Meta, Google and Amazon spokespersons said they were reviewing the designations.

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European Union flags fly outside the EU Commission headquarters in Brussels, Belgium September 19, 2019. REUTERS/Yves Herman/File Photo

Apple and TikTok were less welcoming.

TikTok said it "fundamentally disagree with this decision" and "disappointed that no market investigation was conducted prior to this decision and are evaluating our next steps."

An Apple spokesperson said the company remained "very concerned about the privacy and data security risks the DMA poses for our users."

The iPhone maker had earlier raised concerns that the DMA would lead to more installing of apps that do not come via Apple's App Store, or "side-loading".

"The Commission should balance the need to protect user security and privacy with the very real risk that gatekeeper app stores will use security and privacy as excuses to dilute compliance with their DMA obligations," said Stavroula Vryna, partner at law firm Clifford Chance.

Alphabet's Gmail, Microsoft's Outlook and Samsung's browser were exempted after the companies provided sufficiently justified arguments showing that these services do not qualify as gatekeepers, the Commission said.

The Commission has also opened four market investigations to further assess Microsoft's and Apple's submissions that some of their core platforms such as Bing, Edge and Microsoft Advertising, and Apple's iMessage services do not qualify as gateways.

"iMessage is designed and marketed for personal consumer communications, and we look forward to explaining to the commission why iMessage is outside the scope of the DMA," an Apple spokesperson said.

(Reporting by Supantha Mukherjee in Stockholm, Foo Yun Chee in Brussels and Martin Coulter in London; editing by Jason Neely and David Evans)

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