Brussels, 25 March 2024
Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s “pay or consent model”.
The Commission suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA.
In addition, the Commission has launched investigatory steps relating to Apple’s new fee structure for alternative app stores and Amazon’s ranking practices on its marketplace. Finally, the Commission has ordered gatekeepers to retain certain documents to monitor the effective implementation and compliance with their obligations.
Alphabet’s and Apple’s steering rules
The Commission has opened proceedings to assess whether the measures implemented by Alphabet and Apple in relation to their obligations pertaining to app stores are in breach of the DMA. Article 5(4) of the DMA requires gatekeepers to allow app developers to “steer” consumers to offers outside the gatekeepers’ app stores, free of charge.
The Commission is concerned that Alphabet’s and Apple’s measures may not be fully compliant as they impose various restrictions and limitations. These constrain, among other things, developers’ ability to freely communicate and promote offers and directly conclude contracts, including by imposing various charges.
Alphabet’s measures to prevent self-preferencing
The Commission has opened proceedings against Alphabet, to determine whether Alphabet’s display of Google search results may lead to self-preferencing in relation to Google’s vertical search services (e.g., Google Shopping; Google Flights; Google Hotels) over similar rival services.
The Commission is concerned that Alphabet’s measures implemented to comply with the DMA may not ensure that third-party services featuring on Google’s search results page are treated in a fair and non-discriminatory manner in comparison with Alphabet’s own services, as required by Article 6(5) of the DMA.
Apple’s compliance with user choice obligations
The Commission has opened proceedings against Apple regarding their measures to comply with obligations to (i) enable end users to easily uninstall any software applications on iOS, (ii) easily change default settings on iOS and (iii) prompt users with choice screens which must effectively and easily allow them to select an alternative default service, such as a browser or search engine on their iPhones.
The Commission is concerned that Apple’s measures, including the design of the web browser choice screen, may be preventing users from truly exercising their choice of services within the Apple ecosystem, in contravention of Article 6(3) of the DMA.
Meta’s “pay or consent” model
Finally, the Commission has opened proceedings against Meta to investigate whether the recently introduced “pay or consent” model for users in the EU complies with Article 5(2) of the DMA which requires gatekeepers to obtain consent from users when they intend to combine or cross-use their personal data across different core platform services.
The Commission is concerned that the binary choice imposed by Meta’s “pay or consent” model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers.
Other investigatory and enforcement steps
The Commission is also taking other investigatory steps to gather facts and information to clarify whether:
- Amazon may be preferencing its own brand products on the Amazon Store in contravention of Article 6(5) of the DMA, and
- Apple’s new fee structure and other terms and conditions for alternative app stores and distribution of apps from the web (sideloading) may be defeating the purpose of its obligations under Article 6(4) of the DMA.
The Commission has also adopted five retention orders addressed to Alphabet, Amazon, Apple, Meta, and Microsoft, asking them to retain documents which might be used to assess their compliance with the DMA obligations, so as to preserve available evidence and ensure effective enforcement.
Finally, the Commission has granted Meta an extension of 6 months to comply with the interoperability obligation (Article 7 DMA) for Facebook Messenger. The decision is based on a specific provision in Article 7(3)DMA and follows a reasoned request submitted by Meta. Facebook Messenger remains subject to all other DMA obligations.
Next steps
The Commission intends to conclude the proceedings opened today within 12 months. If warranted following the investigation, the Commission will inform the concerned gatekeepers of its preliminary findings and explain the measures it is considering taking or the gatekeeper should take in order to effectively address the Commission’s concerns.
In case of an infringement, the Commission can impose fines up to 10% of the company’s total worldwide turnover. Such fines can go up to 20% in case of repeated infringement. Moreover, in case of systematic infringements, the Commission may also adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it, or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.
Background
The DMA aims to ensure contestable and fair markets in the digital sector. It regulates gatekeepers, which are large digital platforms that provide an important gateway between business users and consumers, whose position can grant them the power to create a bottleneck in the digital economy.
Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, the six gatekeepers designated by the Commission in September 2023, had to fully comply with all DMA obligations by 7 March 2024. The Commission has assessed the compliance reports setting out gatekeepers’ compliance measures, and gathered feedback from stakeholders, including in the context of workshops.
Today’s formal non-compliance proceedings against Alphabet, Apple and Meta have been opened pursuant to Article 20 DMA in conjunction with Articles 13 and 29 DMA for breach of Articles 5(2), 5(4), 6(3) and 6(5) DMA respectively.
Quote(s)
Today, the Commission opens five non-compliance investigations under the Digital Markets Act (DMA). They concern Alphabet’s rules on steering in Google Play and self-preferencing in Google Search, Apple’s rules on steering in the App Store and on choosing browsers and changing defaults, and Meta’s ‘pay or consent model’. We suspect that the suggested solutions put forward by the three companies do not fully comply with the DMA. We will now investigate the companies’ compliance with the DMA, to ensure open and contestable digital markets in Europe.
The Digital Markets Act became applicable on 7 March. We have been in discussions with gatekeepers for months to help them adapt, and we can already see changes happening on the market. But we are not convinced that the solutions by Alphabet, Apple and Meta respect their obligations for a fairer and more open digital space for European citizens and businesses. Should our investigation conclude that there is lack of full compliance with the DMA, gatekeepers could face heavy fines.
Thierry Breton, Commissioner for Internal Market
Remarks by Executive-Vice President Vestager on the opening on non-compliance investigations under the Digital Markets Act
Remarks by Executive Vice-President Vestager
Today, the Commission has decided to open its first non-compliance investigations under the Digital Markets Act. There are in total five of them.
These decisions to open non-compliance investigations come only two weeks after the implementation deadline has passed and show that DMA compliance is something that we take very seriously. Our five investigations concern Alphabet, Apple and Meta.
This does not mean that we endorse all other measures implemented by gatekeepers which are not (or not yet) subject to investigation. We will continue to use all available tools should any gatekeeper try to circumvent or to undermine the obligations of the DMA. It is important for us to achieve the objectives of the DMA such that consumers have the benefits of open and contestable markets. A market with competition.
The DMA was born out of a reflection process that started back in 2019.
This reflection was very much influenced by our antitrust enforcement experience where we have seen the temptation to flout the law. We have brought several antitrust cases in the tech sector which ultimately led to the DMA. These include cases against Google (Shopping, Android, AdSense and the on-going AdTech investigation), Apple (the AppStore and Apple Pay cases), or Amazon (Buy Box/Prime/Data). We have seen changes as a result of those cases. But it is also clear that some of the issues in the digital economy are systemic and need to be addressed upfront.
This resulted in the DMA proposal presented in December 2020. European Parliament and Council were fully engaged in the process. This allowed us to shape this new regulation to the highest standards and approve it in record-time in March 2022.
In an equally short time, we set up all the structures and the procedures to start implementing and enforcing the DMA. In September 2023, we designated six companies as gatekeepers. These are Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, covering 22 core platform services.
Over the last six months, we have been engaging fully with both gatekeepers and stakeholders to promote full and effective compliance.
7 March was compliance day. We have analysed the gatekeepers’ compliance reports that we received on 7 March. We have hosted public workshops for gatekeepers to present their compliance solutions. Stakeholders provided feedback on the compliance solutions offered. Their feedback tells us that certain compliance measures fail to achieve their objectives and fall short of expectations.
For instance, we heard discontent from stakeholders regarding Apple’s and Alphabet’s fee structures. Especially how some of the fees go against the “free of charge” requirement of Article 5(4). Stakeholders also pointed to shortcomings of Apple’s 6(3) compliance solutions, by referring to the poor choice screen design, burdensome process for changing defaults and inability for end users to uninstall several of Apple’s key apps.
Today, we decided to investigate a number of these suspected non-compliance issues.And as we unearth other problems, we will tackle those too.
That is why, today, we order gatekeepers to retain certain documents. This will allow us to access the relevant evidence in our current and future investigations. Such retention orders are a new tool provided by the DMA. They extend beyond the investigations that we are opening today, and specify what kind of documents that Alphabet, Amazon, Apple, Meta, and Microsoft will have to preserve.
As for the cases we open today, we aim at concluding them in 12 months from now. This is in line with what the DMA is suggesting.
I will now take you through three of our openings and Thierry will take you through the rest.
Our investigations focus on a number of DMA provisions:
We take issue withAlphabet’s and Apple’simplementation of the anti-steering obligations underArticle 5(4) of the DMA.
Under the DMA, gatekeepers must allow business users, free of charge, to communicate freely with end users. And also to conclude contracts directly with their users. The aim of this provision is to promote competition between alternative sales channels in the app economy. To achieve this, consumers must have access to all the necessary information about their choices. Gatekeepers can no longer prevent their business users from informing their users within the app about cheaper options outside the gatekeeper’s ecosystem. That is called anti-steering and is now forbidden by law.
The way that Apple and Alphabet implemented the DMA rules on anti-steering seems to be at odds with the letter of the law. Apple and Alphabet still charge various recurring fees and still limit steering. We will investigate to what extent these fees and limitations defeat the purpose of the anti-steering provision and by that, limit consumer choice.
Those were the first two investigations.
The third one relates to the objective of the DMA to open closed ecosystems to enable competition at all levels. UnderArticle 6(3)of the DMA, gatekeepers have an obligation to enable easy uninstallation of apps and easy change of default settings. They must also display a choice screen. Apple’s compliance model does not seem to meet the objectives of this obligation. In particular, we are concerned that the current design of the web browser choice screen deprives end-users of the ability to make a fully informed decision. Example: they do not enhance user engagement with all available options. Apple also failed to make several apps un-installable (one of them would be Photos) and prevents end-users from changing their default status (for example Cloud), as required by the DMA.
I will now leave it to Thierry to explain the fourth and fifth non-compliance investigation we have opened today.
Remarks by Commissioner Breton
Merci, Margrethe, et bonjour à tous.
Avant de présenter les mesures que nous prenons aujourd’hui, permettez-moi de souligner un point important.
Le DMA est applicable depuis le 7 mars dernier. Cela signifie qu’il est véritablement effectif depuis 18 jours exactement.
Et je vais vous dire une chose simple mais importante : en 18 jours, le DMA a fait davantage bouger les lignes des géants du numérique que lors des 10 dernières années.
Ce n’est pas moi qui le dis, mais les développeurs et les utilisateurs qui voient enfin des changements concrets et de l’ouverture pour laisser à chacun la possibilité de gagner des parts de marché, par exemple pour les navigateurs.
En 18 jours donc des résultats déjà très concrets. Pourquoi ?
Parce que c’est une régulation de marché intérieur. C’est là que la révolution opère.
Vous savez à quel point je me suis battu pour que le DMA soit une régulation dite « de marché intérieur », ex ante donc. Car c’est le meilleur moyen de promouvoir notre continent, l’Europe, qui est un continent ouvert, mais selon nos conditions.
Et un marché de 450 millions de clients, c’est tout bonnement impensable pour quiconque de ne pas y être.
Là où les géants du numérique pouvaient payer sans sourciller des amendes de plusieurs milliards de dollars – soit dit en passant, quand ils devaient les payer, au bout de longues années de procédures, ce qui ne s’est pas avéré systématique, loin s’en faut… – aujourd’hui aucun d’entre eux ne peut se permettre de ne pas être sur notre marché.
Voilà la réalité du rapport de force du monde dans lequel nous évoluons.
Alors est-ce que tout le monde joue le jeu parfaitement du premier coup ? On est en droit d’en douter bien sûr et nous sommes là pour douter par définition en quelque sorte dirais-je.
A tout le moins, pour vérifier.
Et c’est ce que nous faisons aujourd’hui.
Si vous le permettez, je vais prolonger mon propos en anglais.
[Enforcement actions]
Margrethe presented the cases we are opening against Alphabet on anti-steering and Apple on anti-steering and choice screen. Let me now present two other enforcement actions we are taking today.
First, today we are opening a case against Meta. We suspect that Meta is breaching the DMA rules on data combination [Article 5(2) DMA].
You all heard about Meta’s “Subscription for No Ads” model. With this new model, users have to pay if they want to use Facebook and Instagram without targeted advertising. And this has forced millions of users across Europe into a binary choice: “pay or consent”. And if you consent, Meta can use your data, generated for example on Messenger, to target ads on Instagram.
But the DMA is very clear: gatekeepers must obtain users’ consent to use their personal data across different services. And this consent must be free! We have serious doubts that this consent is really free when you are confronted with a binary choice. With the DMA, users who do not consent should be provided with a less personalised alternative of the service, for example financed thanks to contextual advertising. But they do not have to pay.
This is because with the DMA, we want to give back to our users the power to decide how their data is used: to pave the way for business models where citizens’ rights are at the centre of operations.
Some of you may recall, we are already looking into this practice of Meta under the DSA: earlier this month, we sent Meta a request for information to verify how this “Subscription for No Ads” model complies with the DSA obligation to offer at least one option of their recommender systems not based on profiling, but also to assess the risks stemming from the personalisation of digital services.
As you can see and we always said it, the DSA and the DMA work hand in hand to ensure a safer and fairer online space for our users.
Second, today we are also opening a second case against Alphabet. We suspect that Alphabet is breaching the DMA prohibition of self-preferencing [Article 6(5) DMA].
This prohibition is a pillar of the DMA. When organising and prioritising the information online, gatekeepers should not use their power to unduly promote their own services over their rivals. Ranking should be based on transparent, fair and non-discriminatory terms.
Based on our preliminary assessment, this does not seem to be the case when it comes to how results are presented on Google Search. We are concerned that Alphabet’s own services, such as Google Shopping, Google Flights and Google Hotels, still benefit from a preferential treatment. It seems that third-party services are not treated in a fair and non-discriminatory manner.
[Further investigatory steps]
These are the cases where we already have concrete evidence of possible non-compliance. And this in less than 20 days of DMA implementation. But our monitoring and investigative work of course doesn’t stop here. There are in particular two other areas where we are currently digging further, and we may have to open other non-compliance cases soon.
First, we are currently checking if Amazon is treating all products on its Amazon Store fairly – and not favouring its own brand products. The Amazon Store has direct impact not only on countless sellers, retailers and service providers, but also on millions of consumers. It is therefore crucial that Amazon complies with the DMA provisions against self-preferencing.
Second, we also have many questions on Apple’s new business model for app stores:
- We have all seen Apple’s recent move to roll back its decision to bar Epic Games from its Developers Programme: we have questions on the process that Apple used for granting and terminating membership of this Programme, which is the first access point to Apple’s system.
- We also have questions on the optionality of this new business model, the alternative to the previous one – which we all agree was not compliant with the DMA, otherwise the company would still use the old model.
- Finally, we also have questions on the fee structure and several other aspects of the business model. We will check if they allow for real opportunities for app developers in line with the letter and the spirit of the DMA.
Should we have indications of ineffective compliance or possible circumvention of the DMA, we will not hesitate to make use of the DMA’s full enforcement toolbox, including innovative tools that did not exist in antitrust enforcement such as the retention orders. And if our investigations conclude that there is lack of full compliance with the DMA, gatekeepers will face heavy fines.
We have a duty: ensuring full compliance with the DMA. And we will do all we can to create an online space that is fair and competitive to the benefit of all consumers and businesses operating in our Single Market.
Thank you.
Source – EU Commission