Europe’s DMA law: Big Tech meets Party Pooper

Author: Steffen Meyer, Mobile Marketing Content Specialist

The US, China and the EU have a digital party.

US: „I’ll bring innovation.“

China: „I’ll copy them.”

EU: “And I’ll bring the regulation.”

This widely circulating joke humorously captures the contrasting digitalization approaches of these global powers, portraying the EU as the party pooper.

And looking at current developments, there seems to be some truth to it.

Most prominently, Meta’s new Twitter-clone “Threads” is withheld from being rolled out in the EU because of “upcoming regulatory uncertainty”, as a Meta spokesperson stated.  

Although the specific regulations in question were not explicitly disclosed by the company, it is widely assumed the Digital Markets Act (DMA) is the underlying reason. 

Elaborated further in this blog post, the legislation categorizes major digital corporations as “gatekeepers” and subjects them to stringent regulations. Failure to comply may result in fines of up to 10 or 20 percent of their global revenue. 

Even for industry giants like Amazon, Apple, Alphabet, ByteDance, Meta, Microsoft and Samsung who are among the initial companies falling under this gatekeeper classification, such penalties represent a substantial portion of their earnings.

One rule stipulates that the companies must refrain from promoting their own products more than the ones by their competitors.

Given that Meta not only promotes Threads extensively on Instagram but also mandates the use of an Instagram account for signing in – to the extent that deleting your Threads account requires deleting your Instagram account – it appears probable that Meta would contravene this regulation due to its favoritism towards its new app.

Though it’s not clear. And that’s the problem.

With new regulations, there’s always uncertainty how they apply, and with hefty fines looming, even Big Tech seems to be scared.

On the other hand, the new rules open up possibilities as well, and it’s Meta again who seeks to take advantage.

The company recently announced that it wants to allow users to download apps directly via its ads, bypassing the device’s app stores and thus their commission fees from up to 30 percent. This is made possible by the DMA, which no longer permits gatekeepers to maintain its app store monopoly, as it puts competitors at a distinct disadvantage.

So the EU’s idea of providing fairer competition on gatekeeper platforms not only spawns uncertainty but opportunity as well.

The jury’s still out if the EU will benefit or lose from this regulation, since a party pooper can also be someone with a sense of responsibility that prevents people from harmful shenanigans.

However this will play out, it’s mandatory to know of these legal challenges when advertising in Europe. Drop us a line, if you want to know more about it.

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