Keystone Strategy

Europe’s final countdown – will the DMA be top of the pops or major flop?

By Emily Chissell
January 23, 2024   /   5 Minute Read

D-day for compliance with Europe’s Digital Markets Act (DMA) is fast approaching – only six weeks away. But if Google’s recent efforts are anything to go by, we may still be a long way off genuine and effective ‘contestability and fairness’ which the DMA is seeking to achieve. Unless efforts step up a gear, there is a risk it could turn out to be more tick box than tyrannosaurus rex.

Many of us in the competition community (lawyers, economists and businesses) have been involved in significant work behind the scenes in recent months on DMA compliance, in preparation for the start of this potentially groundbreaking new digital regulatory regime. Either on behalf of those third parties with a strong stake in the game (e.g., app developers, competing browsers, publishers and advertisers among many more) or for the gatekeepers themselves.

This blog looks at how compliance is shaping up in light of the changes Google publicly announced last week, the key role of third parties and what lies ahead over the coming months.

Google’s changes – progress but obvious weaknesses

Among the six designated gatekeepers[1], Google appears to have been engaging more openly (comparatively) than many others, at least on the surface. It has already held discussions and workshops with industry stakeholders, in which it shared some details of its proposals, and has been in dialogue with the European Commission on compliance. Last week (17 January), Google published a blog post listing a number of changes it has or will soon make to ensure compliance with the DMA.

From past experience of Google’s competition and regulatory strategy, this isn’t so surprising. It is well-known for generally adopting a more co-operative approach. This stands in contrast with others such as Apple, which has typically been much less willing to engage in constructive discussions with policy makers and regulators, instead opting for aggressive legal strategies in the various antitrust matters in which it is involved. That said, ultimately what matters is the nature and extent of the changes being introduced. And so far, it doesn’t seem that Google’s engagement has had any real impact on its proposals.

Google’s blog post outlined three examples of public-facing changes it will be making in response to the DMA. While it’s positive to see some concrete signs of change, initial impressions are that each has some obvious weaknesses from the get-go:

  • Obtaining consent from users for linking Google services[2] to serve targeted content and ads – in response to DMA requirements that seek to stem the continuous and expansive flow of data that Google gathers on its users. Google’s comprehensive personal data profile gives it a massive advantage over others and is used to build and retain its advertising stranglehold. The sheer volume of data Google has already amassed on people is staggering. But, while sounding promising, from an initial review of the consent screen, its design appears difficult and confusing for people. It’s not immediately obvious what people should do if they don’t want any of their Google services linked, as there’s no single clear and visible button to confirm the de-link choice. Yet conversely, clicking the very top button (where there are well-known ordering effects) results in all of the services in the list being linked as the default. The list of services to de-link also only includes Google’s designated Core Platform Services – it’s unclear what this means for the many other services Google currently collects and uses data from consumers.
  • Changes to Search results, which build off several competition cases and requirements in the DMA not to self-preference in rankings. These changes include a new tab at the top of the search page which contains links to comparison sites so people can filter results by comparison sites, as well as videos, images etc. Google will also be removing some of its own comparative results services like the Google Flights unit and setting up a new space for some categories like hotels, with both comparison site and direct results included. However, it’s not immediately clear how much this will, in practice, level the playing field for aggrieved comparison services – responses so far suggest these changes fall short. The detailed design and implementation here will be crucial, drawing on behavioural evidence – much like many of the other changes.
  • Introducing new choice screens that let people more easily actively pick their default search engine and browser – in response to a specific requirement in the DMA (focussed just on these services and virtual assistants). Recent research, undertaken with Keystone, shows that the design and timing of these screens will be critical. At first glance, Google’s changes look fairly extensive. However, we understand that these screens will only be shown during phone set-up – found to be the most effective point for a choice screen – just to those with new Android devices where Chrome is the default (i.e., not if you have a Samsung or Xiaomi Android phone). In practice, the screen will only be shown at set-up for a small minority of EU handsets. While it will also be shown on your Chrome app on desktop and iOS devices – research shows that clicking on a gatekeeper logo before being asked to choose your default has a significant steering effect. Overall, there’s a real risk these choice screens will fall flat and could even reinforce Google’s position.

Importance of backing up proposals with evidence – testing will be key

Google’s blog also mentioned ‘testing’ at several points. But to date, none of the gatekeepers have made the results of any detailed testing publicly available. For changes involving or relying on engagement from consumers (such as those above), testing the effects and surveying people to understand how they perceive the changes and choices they’re being asked to make will be fundamental. To the extent possible, third parties can also help the Commission by carrying out their own user testing/surveying to demonstrate what changes should be introduced by gatekeepers and suggest specific improvements to their proposals.

Gatekeepers and others should publish or share the results of such testing so that it can be scrutinised in more depth. While the Commission has said that the compliance reports will be published soon after 7 March, expectations on how much detail will actually be contained in these are low. These reports do require details on testing to be provided but it will be important for as much to be published as possible – it shouldn’t be enough to simply say that testing has been done.

What about the other gatekeepers?

Google is among the first of the gatekeepers to officially announce some of the specific DMA changes it is planning to make, although rumours abound, particularly for Apple. But surprisingly little else is yet known.

The main focus on Apple has been whether and how it will open app distribution by allowing side-loading of apps, i.e., installing apps without going through an app store, and the use of third-party app stores beyond Apple’s own App Store – both currently locked down by Apple. But if the recent US announcement from Apple on changes to in-app purchases is anything to go by, the changes coming won’t be groundbreaking. Much like the changes Apple made in response to competition cases in the Netherlands and South Korea, Apple is still charging a hefty fee (27% for digital purchases, even though it won’t be through Apple’s payment systems); there are various hoops for developers to apply for this and users will face a new alarming “scare” screen. Both financially and behaviourally, these changes are underwhelming. If Apple takes a similar approach to the DMA, many app developers and competitors will be voicing their ongoing frustration and disappointment.

Little is currently known about the changes Meta and TikTok intend to make – but messaging interoperability, data access for businesses and clearer ranking will be chief concerns. Meta has this week announced it will be enabling EU users to unlink their Meta services (including Instagram and Facebook), but no details have yet been made public. TikTok has also applied for interim measures to temporarily suspend its compliance obligations pending its challenge against designation, so there’ll likely be many months of legal wrangling ahead.

Compliance discussions and the key role played by third parties

The sheer number and magnitude of the changes required by gatekeepers across multiple markets and services is very significant. It’s clear that there will be no ‘big bang’ on 7 March, and much work will be ongoing.

It is becoming even more evident that third parties will play a critical role in the DMA – shedding light on the problems, providing first-hand evidence, helping the Commission and/or national authorities to understand the changes, and ultimately continuing to push for ‘better and more to be done’ when the changes inevitably fall short. The Commission has repeatedly emphasised how important third parties are and has also made it clear they will look more favourably on gatekeepers who have made efforts to engage.

In terms of how much genuine engagement there has been to date, from our experience, this has been patchy and limited. As seen in many digital cases – the devil really will be in the details. It will be very difficult to gauge the limitations (or positive attributes) of changes until more is known about the specific changes. Engagement also needs to be a two-way street – while third parties can and should continue to make submissions and highlight relevant evidence – there needs to be an ongoing dialogue and sufficient transparency from the gatekeepers to enable meaningful engagement from third parties.

Now is also a critical time to influence the broad shape of compliance. Once gatekeepers start to implement changes to their systems – bearing in mind the Commission already has its hands full – in practice, it’s likely to be much more difficult to get substantive changes, at least initially.

What’s next?

More details about the specific changes gatekeepers plan to implement should emerge over the coming weeks and months. But it’s already clear that the DMA is going to be a marathon, not a sprint.

However, despite all these concerns, it is still likely to be a shorter and more effective route to deliver changes in these markets than relying on traditional competition cases. Non-gatekeeper firms will need to be in it for the long haul and be persistent in raising concerns up to and beyond 7 March. The payoff is that, if done right, there will be meaningful commercial changes.

[1] Alphabet (Search, YouTube, Chrome, AdTech, Play, Maps, Shopping, Android), Amazon (Marketplace, AdTech), Microsoft (Windows, LinkedIn), Apple (App Store, Safari, iOS), Meta (Facebook, Instagram, Whatsapp, Messenger, AdTech) and ByteDance (TikTok) – of which the latter three are challenging their designation.

[2] More information on Google’s change is set out in these blog pages: Manage your linked Google services – Computer – Google Account Help and About DMA & your linked services – Google Account Help

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