Big Tech to EU: "Drop Dead"

The European Union’s new Digital Markets Act (DMA) is a complex, many-legged beast, but at root, it is a regulation that aims to make it easier for the public to control the technology they use and rely on.  

One DMA rule forces the powerful “gatekeeper” tech companies to allow third-party app stores. That means that you, the owner of a device, can decide who you trust to provide you with software for it.  

Another rule requires those tech gatekeepers to offer interoperable gateways that other platforms can plug into - so you can quit using a chat client, switch to a rival, and still connect with the people you left behind (similar measures may come to social media in the future). 

There’s a rule banning “self-preferencing.” That’s when platforms push their often inferior, in-house products and hide superior products made by their rivals. 

And perhaps best of all, there’s a privacy rule, reinforcing the eight-year-old General Data Protection Regulation, a strong, privacy law that has been flouted  for too long, especially by the largest tech giants. 

In other words, the DMA is meant to push us toward a world where you decide which software runs on your devices,  where it’s easy to find the best products and services, where you can leave a platform for a better one without forfeiting your social relationships , and where you can do all of this without getting spied on. 

If it works, this will get dangerously close to better future we’ve spent the past thirty years fighting for. 

There’s just one wrinkle: the Big Tech companies don’t want that future, and they’re trying their damndest to strangle it in its cradle.

 Right from the start, it was obvious that the tech giants were going to war against the DMA, and the freedom it promised to their users. Take Apple, whose tight control over which software its customers can install was a major concern of the DMA from its inception.

Apple didn’t invent the idea of a “curated computer” that could only run software that was blessed by its manufacturer, but they certainly perfected it. iOS devices will refuse to run software unless it comes from Apple’s App Store, and that control over Apple’s customers means that Apple can exert tremendous control over app vendors, too. 

 Apple charges app vendors a whopping 30 percent commission on most transactions, both the initial price of the app and everything you buy from it thereafter. This is a remarkably high transaction fee —compare it to the credit-card sector, itself the subject of sharp criticism for its high 3-5 percent fees. To maintain those high commissions, Apple also restricts its vendors from informing their customers about the existence of other ways of paying (say, via their website) and at various times has also banned its vendors from offering discounts to customers who complete their purchases without using the app.  

Apple is adamant that it needs this control to keep its customers safe, but in theory and in practice, Apple has shown that it can protect you without maintaining this degree of control, and that it uses this control to take away your security when it serves the company’s profits to do so. 

Apple is worth between two and three trillion dollars. Investors prize Apple’s stock in large part due to the tens of billions of dollars it extracts from other businesses that want to reach its customers. 

The DMA is aimed squarely at these practices. It requires the largest app store companies to grant their customers the freedom to choose other app stores. Companies like Apple were given over a year to prepare for the DMA, and were told to produce compliance plans by March of this year. 

But Apple’s compliance plan falls very short of the mark: between a blizzard of confusing junk fees (like the €0.50 per use “Core Technology Fee” that the most popular apps will have to pay Apple even if their apps are sold through a rival store) and onerous conditions (app makers who try to sell through a rival app store are have their offerings removed from Apple’s store, and are permanently  banned from it), the plan in no way satisfies the EU’s goal of fostering competition in app stores. 

That’s just scratching the surface of Apple’s absurd proposal: Apple’s customers will have to successfully navigate a maze of deeply buried settings just to try another app store (and there’s some pretty cool-sounding app stores in the wings!), and Apple will disable all your third-party apps if you take your phone out of the EU for 30 days. 

Apple appears to be playing a high-stakes game of chicken with EU regulators, effectively saying, “Yes, you have 500 million citizens, but we have three trillion dollars, so why should we listen to you?” Apple inaugurated this performance of noncompliance by banning Epic, the company most closely associated with the EU’s decision to require third party app stores, from operating an app store and terminating its developer account (Epic’s account was later reinstated after the EU registered its disapproval). 

It’s not just Apple, of course.  

The DMA includes new enforcement tools to finally apply the General Data Privacy Regulation (GDPR) to US tech giants. The GDPR is Europe’s landmark privacy law, but in the eight years since its passage, Europeans have struggled to use it to reform the terrible privacy practices of the largest tech companies. 

Meta is one of the worst on privacy, and no wonder: its entire business is grounded in the nonconsensual extraction and mining of billions of dollars’ worth of private information from billions of people all over the world. The GDPR should be requiring Meta to actually secure our willing, informed (and revocable) consent to carry on all this surveillance, and there’s good evidence that more than 95 percent of us would block Facebook spying if we could. 

Meta’s answer to this is a “Pay or Okay” system, in which users who do not consent to Meta’s surveillance will have to pay to use the service, or be blocked from it. Unfortunately for Meta, this is prohibited (privacy is not a luxury good that only the wealthiest should be afforded).  

Just like Apple, Meta is behaving as though the DMA permits it to carry on its worst behavior, with minor cosmetic tweaks around the margins. Just like Apple, Meta is daring the EU to enforce its democratically enacted laws, implicitly promising to pit its billions against Europe’s institutions to preserve its right to spy on us. 

These are high-stakes clashes. As the tech sector grew more concentrated, it also grew less accountable, able to substitute lock-in and regulatory capture for making good products and having their users’ backs. Tech has found new ways to compromise our privacy rights, our labor rights, and our consumer rights - at scale. 

After decades of regulatory indifference to tech monopolization, competition authorities all over the world are taking on Big Tech. The DMA is by far the most muscular and ambitious salvo we’ve seen. 

Seen in that light, it’s no surprise that Big Tech is refusing to comply with the rules. If the EU successfully forces tech to play fair, it will serve as a starting gun for a global race to the top, in which tech’s ill-gotten gains - of data, power and money - will be returned to the users and workers from whom that treasure came. 

The architects of the DMA and DSA foresaw this, of course. They’ve announced investigations into Apple, Google and Meta, threatening fines of 10 percent of the companies’ global income, which will double to 20 percent if the companies don’t toe the line. 

It’s not just Big Tech that’s playing for all the marbles - it’s also the systems of democratic control and accountability. If Apple can sabotage the DMA’s insistence on taking away its veto over its customers’ software choices, that will spill over into the US Department of Justice’s case over the same issue, as well as the cases in Japan and South Korea, and the pending enforcement action in the UK. 

 

 


Monday 13th May 2024 5:02 pm

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