Breaking the Summer Break – Digital platform developments you might have missed and should look out for in the second half of 2024

After a thunderstorm of DMA enforcement actions in the first half of 2024, climaxing with the latest preliminary findings send to Apple and Meta mid-June and early July, things seemed to have become a bit quieter around the Commission and its gatekeepers during the summer weeks. But silence can be deceptive – find out here which digital platform developments you might have missed while vacationing and – perhaps – digital detoxing.

By Sarah Hinck

Recommended summer reads – by courtesy of the courts 

For those who lacked a gripping pool read, both the EU General Court as well as the German Federal Court delivered their first big gatekeeper judgments – or as we say in German – undertakings with ‘paramount significance for competition across markets’.

• The EU General Court backed the Commission’s designation of ByteDance with its social network TikTok as a gatekeeper under the DMA. In the first DMA judgment, the court dismissed ByteDance’s claims and established high standards for (potential) gatekeepers to rebut the presumptions set out by the quantitative thresholds in Art. 3(2) DMA. Although the European Court of Justice may still have a say on the issues, the judgment will likely make things easier for the Commission for future gatekeeper designations based on the formalized route to designation under the DMA. For further details, we have summarized the main findings of the judgment here.
• The German Federal Court of Justice (BGH) finally published its decision from 23 April 2024 in July (re-read the court room report here). On 117 pages the BGH confirms the Bundeskartellamt’s finding that Amazon is of paramount significance for competition across markets under Sec. 19a of the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen – GWB). For those of you only interested in DMA issues, you can find the first judicial interpretation of Art. 1(6) DMA and the scope it leaves for the parallel application of national competition law next to the DMA in paras 171-212 of the decision (available only in German). Spain and Italy had already shown the power of competition law, right before the summer siesta, when lashing out at Google and Apple – Alba Ribera Martínez has more on this here.
• Those who thought the Amazon judgment was the first Sec. 19a GWB-court decision fell prey to a misconception. Almost unnoticed, the court also published its decision from 20 February 2024 concerning procedural issues in a Sec. 19a proceeding against Google during the summer. Google had (unsuccessfully) sought to protect its trade and business secrets from access to file by the GPS developer TomTom as interested third party in the proceeding. Why is this relevant? Because it shows that there are competing third parties willing to take an active role in proceedings against Big Tech and that authorities and courts – and competition authorities – are willing to let them. TomTom’s CEO had been a guest of honour at the ECN DMA workshop, remember?

The Commission’s summer plans 

After full-steam DMA enforcement in the first half of 2024, the Commission managed not only to send out its first preliminary findings regarding non-compliance with the DMA obligations against Apple and Meta before the summer break. Also, the Apple Pay saga seems finally closed: The Commission has accepted the commitments proposed by Apple to open up NFC access (standard technology used for contactless payments with iPhones). After the Commission’s preliminarily finding that Apple has abused its dominant position by reserving NFC access only for Apple Pay, Apple will now allow third-party wallet providers access to NFC technology on iOS devices free of charge and under fair, objective, transparent and non-discriminatory procedure and eligibility criteria. DMA experts will notice that Apple would have likely be required to open up for alternative contactless payment providers also under Art. 5(7) DMA. However, the case under Art. 102 TFEU has already been investigated since 2020. Just like the Apple App Store music streaming case, the case highlights another parallelism between DMA and EU competition law enforcement by the Commission.

So, in light of these wrap-ups, what might possibly be on the Commission’s mind during the summer until la rentrée and the return to Brussels in September?

• Well, the European Data Protection Board has provided some food for thought. The EDPB has sent a letter to the Commission on Guidelines for the interplay between GDPR and DMA. Emphasizing that such guidelines would be well within the competences of the EDPB, the board expressed its willingness to work on a joint deliverable with the Commission. Will we soon see another collaboration across divisions within the European authority’s apparatus for DMA enforcement purposes, combining not only efforts of DG Comp and DG Connect, but also the EDPB? Of course, the EDPB is part of the High Level Group under Art. 40 DMA.
• Whether or not under the regulatory umbrella of the DMA, gatekeepers’ partnerships will continue to be on the Commission’s radar. EVP Margrethe Vestager promised in her speech on competition in virtual worlds and generative AI that the Commission will keep an eye on Big Tech partnerships in the AI realm: This applies to close monitoring of the Microsoft/OpenAI collab (Microsoft’s AI tool Copilot is powered by fine-tuned versions of OpenAI models) as well as Google’s arrangement with Samsung to pre-install its AI feature “Gemini nano” on certain Samsung devices.
• Most people in the Brussels bubble are probably busy speculating on who is next or working on their own careers. With the new Commission incoming, it seems that Margrethe Vestager will not be re-nominated by Denmark while Thierry Breton will probably stay on. Since so much in DMA enforcement depends on the vigor and zeal of the Commissioner(s) in charge, this could be an important game changer.

First DMA effects become visible 

Just like summer tan lines, the first effects of the DMA have become visible for end users, some of them ready to be explored (or installed) as a (fun?) summer activity.

• The Apple App Store got some company on the iPhone. Apple reportedly split its internal App Store team into iOS App Store and Alternative Marketplaces teams, the latter will now have to deal with newcomer app stores such as Epic’s new app store as announced by the Fortnite creator and AltStore PAL. If you are not familiar yet with the epic battle, just watch this Epic clip mocking the legendary Apple 1984 clip that referenced the famous 1984 film of the George Orwell book for a post-modern cultural cascade.
• For those who not only hoped for alternatives on the app store market but also for some choice in online search, ChatGPT has launched the SearchGPT Prototype. OpenAI is testing a temporary prototype of new AI search features that seems like a future proof version of Google Search. Finally, some hope for disruptive search?

Where there is sun, there are also shadows and not everyone walks on the bright side of the DMA:

• Following Apple’s example, Meta has announced to keep its new AI innovations from the EU market. A drawback for anyone who relied on the DMA for flourishing innovations as a result of more contestable digital markets or an opportunity for smaller players to fill the gap? Our SCiDAist Rupprecht Podszun shrugs it off and told German daily FAZ that Big Tech will probably find a solution if they can get money out of it. Rupprecht is not too sure that better surveillance of customers by AI tools is what we understand as progress (1984!), and he is equally not too sure that Big Tech suddenly discover their love for abiding to GDPR or DMA. If so – all the better!
• Some (consumers) think the DMA could do better: The Federation of German Consumer Associations has published this report on gatekeeper compliance with Art. 5(2) and 5(8) DMA. Bottom line: There is still room for improvement. Consumers should have better choice to consent voluntarily and fully informed to data sharing across services and regarding prevention of bundling practices, even if outside the scope of Art. 5(8) DMA.

DMCCA gains momentum – Updates from the UK

After the UK legislator took its time to introduce the Digital Markets Competition and Consumer Act (DMCCA) on the 24^th of May, we hear enforcement is gradually picking up steam:

• The UK competition authority, the CMA, has announced that it closed cases against Apple and Google concerning their app store practices under the UK Competition Act, taking advantage of the newly introduced DMCCA to resolve concerns focused on in-app payment system requirements. It will be interesting to watch whether the participative approach foreseen under the DMCCA will deliver similar results to open up in-app payment as delivered by Art. 5(7) DMA.
• Google’s U-turn in the CMA’s Google Privacy Sandbox case, however, reportedly demonstrated risks related to this participative approach. The CMA announced that it will carefully consider Google’s new approach. On 22 July, Google declared that it will now introduce a user-choice prompt which allows users to choose whether to retain third-party cookies. Before, this change of heart, the CMA had already accepted Google’s commitments to remove third-party cookies and other functionalities from its Chrome browser.
• Not only the CMA is coming for Google: reports are out that UK Android app developers have launched a £1bnclass action against Google just a few days ago. They allege that Google has abused its dominant position by excluding competition in app distribution and by charging excessive commissions. Whether or not the DMCCA will play a role here remains to be seen.

No summer break across the Atlantic – Hustle culture or trying to keep up with the DMA?

Not only heatwaves and Kamala Harris’ jump on the presidential stage with a big Wow! hit the U.S. this summer but also a wave of antitrust actions against Big Tech. A lot of the issues at stake seem familiar to Europeans, but it’s still different when U.S. courts and agencies do their job. Here is a selection of what kept the U.S. digital competition community busy over the summer:

• After Google has been found liable for multiple antitrust violations related to its Play Store by the U.S. District Court for the Northern District of California in the Epic Games Inc. v. Google LLC et al. case, the fight about appropriate remedies is now ongoing. Epic had already published its proposed permanent injunction in April. On 12^th August, the Federal Trade Commission (FTC) jumped in. In an amicus brief, the U.S. antitrust watchdog has urged the court not to be lenient with Google and emphasized the importance of this case for future competition on platform markets.
• Another quest for remedies will be one worth watching: On 5^th August, the U.S. District Court for the District of Columbia issued its ruling against Google and its billion-dollar payments to Apple and others to maintain search engine dominance. The decision paved the way for another trial on remedies. The U.S. Department of Justice (DoJ), so it is said, is considering to ask for break-ups, potentially involving Google Chrome or Android. 
• The District of Columbia’s antitrust claim against Amazon’s rule-setting power over its sellers has been reinstated by the Court of Appeals on 22^nd August. The claim concerned Amazon’s alleged price parity practices. Amazon is said to be effectively banning sellers from offering their products for less elsewhere by refusing to highlight their product offers on Amazon Marketplace if they do so. In addition, the claim alleged that wholesalers must guarantee Amazon a minimum profit – regardless of whether Amazon decides to lower prices to compete with other online stores.

Despite taking different routes to tame Big Tech, be it through competition law or new regulation, competition authorities in the U.S., EU and UK have joined forces this summer when it comes to AI. In a Joint Statement on Competition in Generative AI Foundation Models and AI Products, the Commission, CMA, U.S. FTC and DoJ have declared that – despite sovereign decision making – they are working to share an understanding of the issues and are committed to using their respective powers where appropriate. The authorities are concerned about concentrated control of inputs such as data or specialized chips, entrenching or extending market power and arrangements involving key players. To foster innovation and ensure competition they rely on principles such as fairness, interoperability and choice.

What to look out for

While the dog days of summer are almost over, the second half of 2024 seems promising for all those who cannot get enough of digital platform developments.

In early September, we look forward to another round of (competition law) judgments concerning DMA gatekeepers. The European Court of Justice is bound to release its judgments in the Google Shopping case (C-48/22 P), the Google AdSense for Search case (T-334/19) and – the gatekeeper newbie – the Booking.com case (C-264/23).

We can also expect another round of preliminary findings by the Commission as the DMA non-compliance investigations against Alphabet and Apple are still ongoing. We will learn about Booking’s compliance plans in November and whether, as a result of the ongoing market investigation, the online social networking service X will have to comply with the DMA.

The German Bundeskartellamt counts six ongoing proceedings under Sec. 19a GWB, including a pending designation of Microsoft as undertaking with paramount significance for competition across markets. And we will likely hear more from the CMA in the near future. The result of the CMA’s consultation on its draft guidance for the digital markets competition regime established by the DMCCA is still outstanding. Also, we can expect the CMA’s first cases under the DMCCA soon, with Google and Apple and their app store practices being the most likely suspects.

But at this moment, France is the leader of the pack though: After staging glorious Olympics with many memorable moments for social media (see the best “competition venues”, for instance) they now deserve a gold medal for stirring gasps everywhere with the spectacular airport arrest of Telegram’s Pawel Durow. As the charges remind us of the DSA agenda, just imagine our gatekeeper’s CEOs getting arrested for not ensuring DMA compliance.

Goodbye summer slump!

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