The European Parliament’s Digital Markets Act might require tech companies with millions of users to agree upon some way of messaging across services.
Apple, Google, Facebook and other tech companies may be forced into finding a solution that allows users to connect across the various messaging platforms. Currently, each service has its own way of handling communication that is not compatible with others, placing a burden upon the user when there is a need to reach someone using a different platform or service.
A universal communication method would benefit the end-user, whether using an iPhone or Android phone, with Facebook, iMessage, or other social media apps. A cross-platform solution works against the existing model that social media and tech companies have accepted as standard, keeping their customers or users circling back to the same company rather than moving between different services. It’s the same reason for members’ rewards cards at grocery stores and punch cards for a free sandwich at the deli. Keeping the existing customer is much easier than recruiting a new one.
The European Parliament just passed a measure regarding large tech companies such as Apple, Google and Facebook, requiring their messaging apps to allow communication with other services. It’s not just these three companies being targeted. However, smaller companies will have an opportunity to grow without meeting these higher standards. Any company with over 45-million users in a month and has annual sales of 8-billion euros for three consecutive years will be held to these new rules if it is successfully passed by EU member states. Since most of the companies affected by this draft law, known as the Digital Markets Act, are U.S. companies, the chances of the DMA passing are good, even if it gets diluted somewhat.
More Rules In EU’s Digital Markets Act
Another interesting portion of the EU’s Digital Markets Act is the protection of smaller companies that might feel pressure to sell to a larger competitor. Known as ‘killer acquisitions,’ this is similar to when Facebook bought Instagram, preventing what might have been a strong challenger that did not have enough time to grow. The same ‘gatekeeper’ companies that might be required to find a way for cross-platform communication to be possible would be restricted in acquiring startups that show strong potential.
Amazon and Microsoft are also expected to be designated as gatekeepers and possibly as many as 25 other big tech companies. The Digital Markets Act won’t take effect until sometime in 2022 or maybe 2023. The EU Parliament will begin to negotiate the finer details with EU member states and the EU Commission at the beginning of 2022. The EU Commission will work with national authorities for enforcement, and penalties might be as high as 20-percent of total annual sales. So if this law stands, it will get the attention of every large tech company, including Apple, Google and Facebook, since this is not a penalty that can be shrugged off.
Source: European Parliament
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