Europe’s Digital Markets Act Takes a Hammer to Big Tech

The EU targets tech giants’ walled gardens with aggressive new rules, but the smaller companies the DMA is meant to help are skeptical it will work.

If America’s antitrust motto is “break up Big Tech,” Europe now has its own variation: “Don’t break them up, break them open.”

That was the advice Cédric O, France’s digital economy minister and a central figure in drafting the EU’s new Digital Markets Act (DMA), said stuck with him as he negotiated radical new rules that aim to tackle the power of Big Tech in Europe. “That’s what the DMA is doing today,” he said in a press conference on Friday.

Hours before, late on Thursday evening, European lawmakers agreed on aggressive new rules that aim to crowbar open the app marketplace to let in smaller competitors.

The DMA, which is expected to be enforced before the end of this year, will require companies like Apple, Facebook parent Meta, and Google to let their services intertwine with those of rivals. According to members of the European Parliament (MEP), this means Apple will be made to allow iPhone users to download apps from rival app stores, and WhatsApp will have to let people use its app to communicate with others using rival messengers. If they don’t, they could face fines of up to 20 percent of their global turnover, and the European Commission will also be able to impose a ban on mergers.

Lawmakers shrugged off accusations of anti-Americanism from Washington, writing the rules so that Europe can concentrate its resources on reigning in the market power of Big Tech. Only companies with a market capitalization of more than €75 billion ($​​83 billion) and 45 million monthly active EU users fall under the scope of the act.

Technically the law still faces a final vote in the European Parliament and among representatives from the European Union’s 27 member states, but its approval is considered a formality. Margrethe Vestager, European Commission vice president and digital chief, said on Friday that she expects the DMA to take effect in October. From that date, tech companies will have to prove they are not hampering competition. “It’s not up to the Commission anymore to prove to them that they have unfair business models,” says MEP Andreas Schwab, lead negotiator for the DMA.

The change Europeans will notice most is that they will no longer be forced to use a tech platform just because it is the most popular, says Marcel Kolaja, a Czech MEP from the Greens/European Free Alliance group in the European Parliament. “There are major providers—as the legislation calls them, ‘gatekeepers’—who have an enormous amount of users and use that as an advantage of the service,” he says. “So citizens don’t necessarily join the service because they think it’s the best but because it is the most used and where they find most of their friends or business partners.”

The DMA plans to change that. From October, WhatsApp users would be able to contact people using other messaging services, such as Signal or Telegram, if those companies sign up to the new system. Whether smaller messengers actually want to interoperate with WhatsApp is unclear. “Interoperability would cement the monopoly of the top dogs, instead of breaking it up,” says Julia Weiss, spokesperson for the German messaging app Threema, which charges its more than 10 million users a monthly or yearly fee. “If existing users of free messenger A with bad privacy practices could communicate with users of privacy-conscious paid messenger B, they will not pay money for messenger B, effectively depriving it of its only source of revenue.”

Everyone thinks it’s normal to make a call without knowing which provider the other person is using, says MEP Paul Tang. “This should be a common exchange. It’s not just because Threema or Signal do not want it, it’s also the convenience of the user.”

Some MEPS, including Tang, expressed disappointment at a compromise that waters down the idea of interoperability, rather than applying it across more services. “Interoperability for social media is being pushed into the distant future,” German MEP Martin Schirdewan, cochair of The Left group in the European Parliament, told WIRED over email. He also described it as a “scandal” that users will have to wait three years before group chats can include members from different apps.

The Digital Markets Act is half of twin technology legislation MEPs promise will reshape Europe’s relationship with US tech giants. While its counterpart, the Digital Services Act, focuses on illegal content, the DMA is Europe’s answer to complaints that have ricocheted across the continent for years. Sweden’s Spotify says Apple’s app store fees give Apple Music an “unfair advantage.” Swiss email provider ProtonMail says Google and Apple use default settings to favor their own email apps on Androids and iPhones. And German cloud provider NextCloud has branded the way Microsoft bundles its OneDrive cloud storage service with the company’s other products as anticompetitive.

Yet Europe’s tech companies were hesitant to celebrate the new rules. The EU could have gone further, says ProtonMail founder Andy Yen, who has advocated for “choice screens,” or a list of email providers users can choose from when they set up a new device. “Based on what has been made public so far, it appears that choice screens will only be implemented for a very limited range of services, but we will have to wait for the final text to know for sure,” he says.