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By Foo Yun Chee and Martin Coulter
BRUSSELS/LONDON (Reuters) – As the world’s biggest technology companies revamp their core online services to comply with the European Union’s landmark Digital Markets Act, the changes could give some smaller rivals and even peers a competitive advantage.
The DMA is Europe’s attempt to rein in Google, Amazon (NASDAQ:), Apple (NASDAQ:), TikTok owner ByteDance, Alphabet’s (NASDAQ:) Meta Platforms (NASDAQ:) and Microsoft (NASDAQ:) and create a level playing field for smaller rivals and, ultimately, greater competition for the Europeans.
The sweeping legislation forces some of the world’s largest tech companies to make it easier for consumers to choose services from different providers.
“The winners will be small European businesses who will have more options and greater visibility than large companies,” said Christophe Carugati of consultancy Digital Competition.
For example, Meta must make its Facebook Messenger and WhatsApp services interoperable with eligible competitors, as long as they meet the company’s technical and security standards.
In practice, this means that users of other messaging apps like Signal and Telegram – which have gained traction internationally for their emphasis on protecting user privacy – may soon be able to chat with Messenger and Whatsapp contacts without changing apps.
Meta states in its compliance report that it is striking a balance between creating a workable approach for third-party vendors interested in becoming interoperable with Meta while maximizing user safety, security, and privacy.
Likewise, users of Google’s Android phones will be granted a choice of default search engine when setting up their device, representing a big opportunity for alternatives like privacy-focused DuckDuckGo and eco-conscious Ecosia.
“Implementing these new rules is a step in the right direction, but the test of fact is always what you eat and whether you see significant changes in market share,” said Sophie Dembinski, head of public policy at Ecosia.
Google said in a blog this week that the changes to search results mean large intermediaries and aggregators would get more traffic while hotels, airlines, merchants and restaurants would get less.
Consumers in the EU have also gotten new privacy protections, as the DMA introduces new rules on how these companies use their data.
For example, users can distinguish their Facebook and Instagram accounts, so information will no longer be shared between platforms for tracking and targeting purposes.
WARS IN THE APP STORE
While the DMA offers new avenues for smaller rivals to access consumers, the incumbent tech giants could also see their competitors bite into their market share.
Apple is likely to lose the most from the DMA, which forces it to open its own profitable App Store, an opportunity that Big Tech competitors and smaller start-ups are likely to pounce on.
According to the DMA, Apple will have to allow software developers to distribute their apps to users in the EU outside of its App Store.
Apple warned that changes to the iOS mobile operating system, the Safari web browser, and the App Store pose greater risks to users and developers as they could include new avenues for malware, fraud and scams, illicit and harmful content, and other privacy and security issues. safety. threats.
Apple critics say the company is only interested in defending its profits since it receives a 30% commission on in-app purchases.
The implementation of the new rules comes amid an escalating row between Apple and Fortnite maker Epic Games, one of its longtime critics.
Fortnite had planned to launch its app store on iPhone and iPad in the EU, as per the DMA. On Wednesday, however, Apple closed a new developer account that Epic had created in Sweden. In response, Epic accused Apple of removing one of its biggest potential competitors from the Apple App Store.
The Commission has asked Apple for explanations and sees the issue as a priority, which could become a testing ground for the new rules.