Author: Steffen Meyer, Mobile Marketing Content Specialist
Some see dramatic changes for the app economy, others a long overdue regulation of Big Tech. The digital world is arguing about the new EU initiatives that are on their way to become law:
- Digital Markets Act (DMA), which focuses on regulating big players in the digital world
- Digital Services Act (DSA), which should provide more consumer protection and transparency in general
As to be expected of EU regulation, both of the acts go into a lot of detail and their PDFs encompass roughly two hundred pages (DMA PDF: 81 pages; DSA PDF: 113 pages). That is why we provide you with basic introductions to what these regulations will entail for the app economy.
Because believe us: the effects are huge.
This blogpost starts with the DMA which at its core is putting out “obligations” for large digital platforms that are called “gatekeepers”.
What are gatekeepers?
According to the law, a digital platform provider is a gatekeeper when it …
- … has “significant impact” on the EU market
- … operates an important platform “for business users to reach end users”
- … will most likely enjoy “such position in the near future”
While this sounds vague, the regulation lists exact conditions for each of these descriptions: According to these, a gatekeeper is a gatekeeper when it …
- … (A) owns an important platform service in three EU member states and it either…
- … achieves an annual EEA turnover equal to or above 6.5 billion euros in the last three financial years
- … belongs to a corporation with an average market capitalisation or the equivalent fair market value amounted to at least 65 billion euro in the last financial year
- … (B) currently has more than 45 million monthly active end users and more than 10.000 yearly active business users in the EU
- … (C) crossed the above mentioned user thresholds in each of the last three financial years
So Apple and Google with its app stores surely meet these conditions and thus fall in the category “gatekeeper”. So the question is:
What are their obligations?
There’s a bunch of Do’s and Don’ts listed in the regulation and you will find extensive information on the official site of the European Union. However, since we didn’t want to bury you in thousands of details, we picked four rules that we found to be relevant for app marketers.
1. A gatekeeper must share relevant data with their business users and provide them with the tools and information necessary to carry out their own independent verification of their advertisement hosted by the gatekeeper.
This will probably have huge impacts on the big networks’ self-attributing practices which keeps data behind digital walls and Apple’s SKAdNetwork that provides only a fraction of data with a time delay. Furthermore, new privacy rules could be put on the table again.
This would give marketers more access to data and the new attribution world will probably look differently than it is predicted at the moment.
2. A gatekeeper must allow app developers to use external payment systems.
At the moment, apps have to use the payment system by the app stores for in-app purchases. Otherwise they won’t be listed. The publishers’ problem with this is that Google and Apple are charging up to 30 percent for each purchase.
There are legal battles worldwide around this topic and the EU may create a precedent here. If this rule will go into effect, this could open up more competition on payment systems, driving down prices, and possibly create new opportunities for marketing strategies.
3. A gatekeeper isn’t allowed to rank their own products or services higher than those of others.
It’s probably going to be hard to prove, but this rule will make it easier for publishers to compete with products that are owned by Google and Apple. When this law comes into effect as promised, it doesn’t matter who is the publisher but who’s got the best App Store Optimization (ASO). Get the first few tips on this topic here and here.
4. If a gatekeeper doesn’t comply with these rules, they are threatened with fines up to 10% of their worldwide turnover, or up to 20% in the event of repeated infringements.
These numbers will scare even Big Tech companies but the EU plans even more: In case of “systematic infringements” it threatens to take “proportionate” actions that will go beyond financial punishments. The EU even considers the divestiture of (parts of) a business.
What’s the future?
The law is still in the making and there will be lots of discussion and lobbying around it, so nothing’s set in stone (have a look at the status of the procedure here).
However it’s wise to follow this process closely, since it’s bound to stir up the whole app economy. If you don’t find the time for this but want to be prepared, contact us and arrange a meeting. Our consultants at Customlytics are happy to help.
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