WhatsApp will allow messaging with other chat apps, and Apple will let iPhone owners download apps from rival app stores. Here's what's set to change under a major new EU law forcing big tech to play fair. — Photo: Zacharie Scheurer/dpa
BRUSSELS/SAN JOSE: A new era of fairer competition and greater choice for smartphone owners began in the European Union on March 7 when the bloc's Digital Markets Act (DMA) came into effect.
What is the idea behind the EU's new law?
The law is intended to ensure more competition for digital services and better opportunities for new apps trying to contend with offerings from tech giants.
The EU believes that some large platform operators have become so powerful that they can cement their market position and stifle any competition. The DMA is intended to loosen up this rigidity with rules targeting the so-called "gatekeepers" of tech.
Which companies and services are affected?
The European Commission has so far identified 22 "gatekeeper" services from six companies. Unsurprisingly, these include the US heavyweights Apple, Amazon, Microsoft, Google parent company Alphabet and the Facebook group Meta. The list also includes the video app TikTok from Bytedance, a company originally from China.
What differences will users notice?
Two DMA requirements stand out.
First, the messenger app WhatsApp from Meta is to be opened up to other services, meaning to users in the EU won't always have to install WhatsApp to message someone who uses this app.
Second, Apple is now required to allow iPhone owners to install apps from sources other than its own App Store. This is a first for Apple devices, since (unlike on Android) users could only install apps that Apple had approved.
However there are some caveats, and it's still unclear what the user experience will be like. While WhatsApp has open up its platform, competing services such as Signal and Threema have so far refused to collaborate with this network at all due to data privacy concerns.
And with Apple's other download platforms, it remains to be seen how many developers will get involved in rival app stores – or whether the conditions set by Apple will lead many to stay on the company's App Store.
How does WhatsApp intend to implement cross-app messaging?
Messages from other services will end up in a separate area. This should make it clear that different security standards could apply to the messages, WhatsApp manager Dick Brouwer told the magazine Wired.
WhatsApp uses Signal's encryption technology – and this makes it easier to work with other services that also use it. However, other reliable encryption protocols will also be supported.
Why don't other services want to join in?
Signal says that its service goes beyond content protection, and that it has developed new techniques to encrypt confidential metadata such as profile names and photos, contact lists, group memberships and information about who is sending messages to whom.
Other major apps do not come close to meeting Signal's data protection standards, it says. Threema says we don't know for sure what happens to user data when it is transferred to WhatsApp, since WhatsApp is not open source.
There are also unresolved issues on the anonymity of users. WhatsApp uses the phone number and Threema uses a randomly generated ID. This could potentially de-anonymise Threema users.
What will other app stores on the iPhone be like?
App developers can now do one of two things: Leave everything as it is and continue to distribute their applications only via Apple's App Store with a fee of 15 or 30% of the revenue from digital services and subscriptions.
Alternatively, they can leave the App Store make use of the new options. In this case, different conditions apply to them.
For apps that they distribute via Apple's App Store, the levy is reduced to 10 and 17% respectively – plus a further 3% if they use the group's billing system.
Things are different on other platforms. A new "core technology fee" of 50 cents for the first installation of an app in a 12-month period is due after one million downloads. For apps that are distributed via other marketplaces, Apple will only receive this fee. If developers switch to the new model, there is no way back.
Will app providers go along with this?
The games company Epic Games, whose app "Fortnite" has been banned from Apple's App Store following a breach of company rules, wants to launch its own download platform to the iPhone.
The app marketplace Setapp, which allows apps to be used on a subscription model, is also set to launch in April. At the same time, music streaming market leader Spotify – and Epic – have strongly criticised the new rules.
Spotify manager Avery Gardiner, who is responsible for competition, says that Apple's implementation "doesn't even come close" to fulfilling the DMA requirements.
Where do critics see problems?
From Spotify's point of view, the switch to a new fee structure and the "core technology fee", among others, contradict the DMA. Spotify is one of the larger services that would be subject to the core technology fee. And it could really hit its finances because it would not only have to be paid for currently active users.
Even if someone only has the app unused on their iPhone, it will cost Spotify 50 cents for the first automatic update in a twelve-month period.
Apple has designed the new fees in such a way that it is not attractive or even viable for developers to distribute their apps via other stores, Epic and Spotify say.
What is Apple's position on the DMA requirements?
Even before the DMA, the company insisted that app distribution only via its own store was the better solution for users, as it would better protect them from data theft and fraud. Even now, the company emphasises that it sees apps from other sources as a potential security risk that needs to be contained.
For this reason, they will also be checked to see whether they may contain false information about their functions. Authorities and some companies demanded assurances from Apple that they could prevent app downloads from other marketplaces.
What happens if European users leave the EU?
According to Apple, the DMA changes only apply to users whose profile is set to one of the EU countries and who are actually in the EU. If you leave the EU for a short trip, everything will stay the same.
But if you leave for a longer period, you will not be able to install new app marketplaces. Apps downloaded from them will continue to work – but you won't be able to update them.
And what does this look like on Android smartphones?
Phones running Google's Android operating system have long been allowed to download apps from other marketplaces, so the EU's law does not impact Android users in that scope.
However, Google is being made to adapt elsewhere. In web searches, results from specialised search engines will be given more profile in future, for example when looking for details on flights, hotels and shopping offers.
Who decides if "gatekeepers" are following the DMA rules?
This is done by the European Commission with the help of market research and comments from other companies. EU Competition Commissioner Margrethe Vestager said that compliance with the DMA rules would be scrutinised with the highest priority.
Shortly before the rules have to be applied, Vestager also pointed out that the US$1.84bil (RM8.6bil) fine imposed on Apple in the dispute over its handling of music streaming services was largely intended as a deterrent to demonstrate the Commission's determination.
Speaking to financial wire Bloomberg, she emphasised that companies should not make their DMA implementation unattractive for their customers and users.
Violations of the DMA could result in penalties of up to 10% of annual turnover – and up to 20% in the event of repeated violations. Ultimately, the company could also be broken up if it refuses to comply. In the end, courts are set to decide on penalties. – dpa
