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European Union approves set of Digital Acts putting the big tech companies under pressure

The European Parliament passed a landmark Digital Security Act!

The European Union approved two new Digital Acts that will force big companies to revise their regional digital business policies. The European Parliament reached an agreement regarding these laws in late March this year after 15 months-long debate. The directions were initially proposed in December 2020 by the European Commission. 

European Union seeks to create a safe digital space with the new Digital Acts

The Digital Markets Act is the EU’s new law to ensure a safe and accountable digital space and a fair and open digital market. The Digital Markets Act establishes criteria for the companies to qualify as gatekeepers. The gatekeepers will have to comply with the dos and don’ts listed under the Digital Markets Act. Violators of the law could face penalties from 10% to 20% of their yearly global turnover.

The Digital Markets Act specifically targets Big Tech companies. The act aims to stop big companies from establishing a monopoly by giving more chances to the smaller and new players in the market. At the moment, the digital business undoubtedly contributes a large portion of the world economy. A smaller number of online platforms play a crucial part in these activities.

Consumers are also highly dependent on these smaller numbers of online platforms for digital transactions. The Digital Markets Act will now increase the digital market’s contestability and ensure fairness by establishing a definite set of laws. The DMA will constrain the gatekeeper’s range of actions and make the market more open to competition. 

The Digital Services Act enables the protection of users’ rights online. The Digital Markets Act creates fair, open online markets. Big platforms will have to refrain from promoting their own interests, share their data with other businesses, and enable more app stores. Because with size comes responsibility – as a big platform, there are things you must do and things you cannot do.

Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age

When will the new regulations be enforced

According to the announcement by the European Union, after the signature from the Council of the European Union, Digital Markets Act will enter into force after 20 days of being published. After that, the gatekeepers will get three months to declare their status to the commission. It is safe to say that we will see this act in force before 2023 ends. 

How will the Digital Acts affect the Gaming industry

For a long time, Apple and Google Play have dominated the mobile gaming ecosystem. With the new acts enacted, these two platforms must allow users to install third-party apps or app stores that use or interoperate with them. The enactment of these laws will also bring change in the revenue policy of the tech companies. It will prevent platforms from blocking payments via third-party systems to ensure they receive their commission on all transactions, typically 30%.

Companies will also not be able to require app developers to use certain services they provide, such as payment systems, to have their software appear in the gatekeeper’s app store. One of the most significant points of the new law is that companies like Google will no longer be able to do targeted advertisements by collecting client information from other services. 

The new law passed by the parliament has also targeted Apple’s App Store concerning its practices and preinstalled applications. Apple will need to change how apps are displayed in the App Store to give the small developers more chances to download their applications. Apple will also need to allow its users to uninstall preloaded first-party apps from the devices procured. Thus, both Google and Apple will be constrained and their practices more regulated.

Final Thoughts

The Digital Markets Act will surely change the dynamics of the digital market. We will see new competition in the market, and people will slowly be less dependent on the already established companies. The act will disincentivize the growth of already large companies and encourage independent innovation by the smaller companies. 

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