DMA: European Union designates App Store and Google Play as core platform services provided by gatekeepers
It’s official: the DMA is starting to be enforced. Today the European Union designated Apple and Google as gatekeepers under the Digital Markets Act, along with Amazon, TikTok parent ByteDance, Microsoft, and Meta. And, as expected, the App Store and Google Play are squarely in the EU’s sights: both have been classified as core platform services that have significant DMA obligations.
In July 2022, I said that the Digital Markets Act would “change app stores as we know them.”
In fact, it’s likely that the DMA will force companies like Apple to allow third-party app stores within just 6 months.
DMA: big changes coming
The Digital Markets Act forces companies of a certain size to allow third-party interoperability with their services, allow businesses using their platforms to promote their own services and make sales outside of the gatekeeper’s platform. It will also restrict gatekeepers from privileging their own products or services above third-party apps, stop them from preventing people from connected with businesses outside their platforms, and force them to allow pre-installed app deletion, among other things.
A year ago, I thought the DMA would likely bring big changes, including:
- Side-loading apps (and perhaps even installing apps right off a web site)
- Independent app stores
- Third-party payment processing
- Interoperation with with core messaging services
- Access to hardware features that platforms might have reserved for themselves
- Switching AI assistants
Now we know that much of that will be happening within the next half a year.
There are 22 core services that the 6 designated gatekeeper companies own that will be impacted, including the App Store and Google Play. You’ll note that a few others that are relevant to mobile marketers are Google Ads, Meta’s advertising platform, and Amazon’s advertising service. Android and iOS are core platforms services under the DMA as well, and so are the Apple browser, Safari, and Google’s Chrome. TikTok also makes the cut as a social network.
- Social Networks
- TikTok
- Messenging services
- Messenger
- Intermediation services
- Google Maps
- Google Play
- Google Shopping
- Amazon Marketplace
- App Store
- Meta Marketplace
- Video
- YouTube
- Search
- Google Search
- Advertising
- Amazon
- Meta
- Browsers
- Chrome
- Safari
- Operating systems
- Android
- iOS
- Windows
So far, Apple Search Ads is not impacted by the DMA, though iMessage is under investigation as a core platform service from a gatekeeper. iPadOS is also under investigation, even though the EU acknowledges that it does not meet the criteria for gatekeeper status. Microsoft’s Bing and its advertising platform are also under investigation.
App marketing: bigger changes coming
Gatekeepers have 6 months to comply with all the regulations of the DMA: until March 2024. That means that basically at the same time as marketers are dealing with all the implications of SKAN 4 and Privacy Sandbox on Android, there will be new changes for how the largest digital advertising platforms in the world operate, and for how the main method consumers get apps will evolve.
Here’s a few things that seem likely to change:
- Ad targeting
Gatekeepers can’t process personal data of end users using third-party services, or combine data across core platforms, or use personal data from third-party services, for advertising purposes. Nor can they use data from one core service to power ads in another service … unless they get explicit consent. (There’s a reason why Meta is looking at subscriptions options.) - Sole source/do not contact rules
Gatekeepers can’t prevent app publishers from offering products or services off their platforms. (In other words, Apple’s attempts to block off-app purchases that avoid paying Apple’s cut are likely in trouble.) - Your users/customers/players are your users/customers/players
Gatekeepers can’t prevent app publishers from contacting users — free of charge — and presenting offers … on the core service or off. - Payment service freedom
Gatekeepers cannot require business users — AKA app publishers — to use their built-in payment systems. (Or browsers or sign-in systems or other technical services.) - Transparency on ad prices and publisher revenue sharing
Gatekeepers will need to freely provide daily data on prices, discounts, surcharges, payments to publishers, and full means by which those numbers are calculated. Importantly, this applies to both advertisers and publishers, meaning publishers will know the exact value of their inventory to advertisers and how much of the total purchase price goes to the gatekeeper ad platform. - App uninstalls
Gatekeepers’ pre-loaded apps must be user-deletable under the DMA, meaning a number of things. One, there could be more fair competition for third-party services that compete with the gatekeeper’s own additional offerings (like Apple Music from Apple). And two, any preload apps from third parties on Android smartphones also need to be user deletable. - App Store freedom
Gatekeepers need to allow and technically enable the installation and use of third-party app stores. Gatekeepers also have to allow users to set those as their default app stores. - No privileging of services
Gatekeepers cannot rank or index their own services preferentially over competitive services. - Open hardware requirements
Gatekeepers have to allow third-party companies access to the same hardware and software features they use. That means, in just one example, Apple won’t be able to restrict NFC use to its own wallet or other services. - More data for advertisers
Gatekeepers are required by the DMA to provide advertisers, publishers, and third parties authorized by them, “with access to the performance measuring tools of the gatekeeper and the data necessary for advertisers and publishers to carry out their own independent verification of the advertisements inventory, including aggregated and non-aggregated data.” (Non-aggregated data: interesting!) - Search algorithm transparency
Gatekeepers who offer search engines must provide data on rankings, queries, clicks, and views to “any third-party undertaking providing online search engines.” (I wonder how many new “search engines” will pop up in order to get a look under the hood of Google Search and App Store search.)
There’s more. Much more. You can read the entire piece of DMA legislation here. Add it all up, however, and what it essentially means is a lot of work, expense, and distraction for gatekeepers that will end up leveling the playing field for both business users of their platforms and potential competitors.
DMA changes: it’s early days still
It’s early days still.
Apple, Google, Microsoft, Amazon, Meta, and ByteDance have 6 months to comply with all the DMA regulations. If they don’t, there are hefty financial penalties: up to 20% of their annual global revenue, or even requirements for gatekeepers to divest themselves of certain platforms, features, or products.
But what is clear is that the DMA is going to have a huge impact on marketing and monetizing mobile apps.
Imagine big apps becoming their own app stores.
Epic, which has run a three-year battle against Apple’s control over the App Store and payments on iOS, will certainly want to run an App Store on iOS.
Imagine payments via multiple methods.
Imagine increased competition for core gatekeeper apps.
There’s a ton more to think about there, but the upshot is that smart mobile publishers are going to find more ways and places to both advertise their apps and monetize them. The unanswered question at the moment is whether this DMA legislation in Europe will be echoed around the world in Asia, North America, South America, and Africa.
If so, it’s truly a new global ball game in mobile.
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