EU’s DMA forced Big Tech to adapt or face punishments in 2024

The news: The EU’s Digital Markets Act (DMA) changed business operations and competitive practices for most Big Tech companies this year.

• The regulation specifically targeted antitrust moves by Apple and Meta, raising concerns about gatekeeping and anticompetitive search and ad systems.
• The DMA pushed against data scraping and user privacy violations amid the rise of generative AI (genAI).

Taking a bite out of Apple: Most of Apple’s DMA fights this year surrounded the App Store’s walled garden and Apple Intelligence genAI features. Apple ultimately chose to simply withhold Apple Intelligence from EU users.

The EU also fined Apple €1.84 billion ($2 billion) in March for App Store anti-steering practices.

A flurry of App Store changes: The App Store is much different today for EU users and developers than it was last December.

• To comply with DMA rules, Apple started allowing retro game emulators, opening the iOS market for vintage arcade and console games.
• iOS, the Safari browser, and the App Store welcomed alternative app marketplaces, and the App Store finally started allowing third-party payment systems.
• Starting with the iOS 18 update, users could make non-Apple app stores their default app marketplaces and change their default browser, mail app, and contactless payment app.

Our take: Apple’s efforts to comply with the DMA could lead to a more open iOS ecosystem, but its hesitancy to roll out Apple Intelligence features in the EU suggests it might continue to withhold some of its most advanced AI tools in the region, which could prompt further regulatory scrutiny.

Meta’s mess: On the Meta front, the DMA took issue with widespread data-scraping practices and AI training efforts.

• In July, the European Commission (EC) pressed charges against Meta for its ad-free subscription offering, saying it violates DMA standards and doesn’t give consumers a fair choice between existing services and a model that uses less personalized data. It could fine Meta up to 10% of its global revenues.
• Meta was fined €91 million ($98.5 million) in Ireland for storing half a billion user passwords unencrypted, which could damage consumer trust.
• The EU also pushed Meta, through DMA requirements, to let users decouple their WhatsApp, Facebook, and Instagram accounts.

Our take: Big Tech platforms struggled this year to find their footing within the DMA’s stringent requirements. Ongoing pushback against antitrust ad practices and user data collection could lead to significant operational changes for these companies.