When the European Union’s Digital Markets Act passed in 2022, it carried profound implications curtailing Big Tech market abuses. The legislation categorizes companies as digital “gatekeepers” obliging fairer competition practices under intensified regulatory scrutiny.
Recently, key Apple and Microsoft services avoided initial DMA gatekeeper designation despite meeting other designation criteria. This Explainer examines reasons why iMessage, Bing, Edge and Microsoft Advertising evaded early inclusion together with what it signals about EU ambitions balancing innovation versus heavy-handed oversight.
Understanding the Digital Markets Act’s Core Tenets
At its heart, The EU Digital Markets Act specifically targets anti-competitive business practices employed by heavyweight tech giants to disadvantage smaller firms and limit consumer choice.
Once enforced, dubbed gatekeepers face steep fines up to 10% of annual income for violations plus strict remedies ensuring interoperability and data transparency.
Criteria to Earn Gatekeeper Status
The DMA applies quantitative thresholds determining gatekeepers:
- €8+ billion market cap or €80+ billion turnover
- 45+ million monthly EU users
- 10,000+ yearly business EU users
Plus qualitative stamps like platform ecosystem entrenchment blocking competition.
Companies meeting both quantitative and qualitative criteria earn oversight as digital gatekeepers under the DMA.
Why iMessage and Bing Didn’t Initially Qualify
Interestingly, some Apple and Microsoft crown jewels avoided early gatekeeper designation despite seemingly checking pertinent boxes.
These excluded services include iMessage, Bing, Edge and Microsoft Advertising – but why?
Limited Relative Market Share
While Apple iOS boasts majority EU smartphone market share, iMessage individually captured just 25% of European messaging app usage – well below crosstown rival WhatsApp at nearly 60%.
Likewise Bing, Edge and Microsoft Advertising lagged category competition on standalone monthly active audience metrics during assessment periods.
Integrated Platform Benefits Consumers
Authorities also conceded tightly integrated iMessage posed less concern than cross-platform apps regarding market fairness or barriers limiting competition.
Essentially, keeping certain experiences exclusive maintained feature development incentives and consumer value – preempting initial gatekeeper designation.
What Non-Designation Means Moving Forward
Avoiding early Digital Markets Act gatekeeper status carries important repercussions for Apple and Microsoft products:
Avoids Interoperability Requirements
For now, iMessage sidesteps mandates requiring interoperability with rival open protocols likes RCS chat favored by Android.
This permits Apple retaining walled software ecosystem control absent external regulatory interference.
Prevents Data Portability Obligations
Similarly, Bing and Edge bypass data openness conditions compelling search engine competitors allowing transparent portability elsewhere.
The duo stay clear ensuring proprietary engines or indexes get licensed freely preventing gatekeeper designation.
What’s Next Monitoring DMA’s Evolutions
It remains early days predicting long-range DMA impacts both implementing policy and assessing law effectiveness.
While Apple and Microsoft snub early oversight, their positions appear tenuous if market share or practices provoking anti-competition complaints emerge.
Additionally, mandated monitoring suggests EU willingness allowing regulatory scope expansion reactively responding to future gatekeeper qualifying scenarios.
However for now, exempt status allows both technology leaders continued latitude dictating closed software environment terms benefiting shareholders and consumers.