Tag: Digital Markets Act

Tech News : Sending WhatsApp Messages To Other Messaging Apps

Posted on by Paul Stradling

In response to changes in the European Union’s Digital Markets Act (which came into force in March), WhatsApp users will soon be able to send messages from WhatsApp to people using other messaging apps, e.g. Messenger, Telegram, and Signal.

What Change In The Digital Marketing Act? 

Meta-owned WhatsApp is making this major change because the EU’s Digital Markets Act – DMA (a regulation aimed at promoting competition and reducing monopolistic practices in the tech industry) requires major platforms like WhatsApp to become interoperable with other messaging services, i.e. there must be interoperability between WhatsApp and other third-party apps.

Because Meta Is A “Gatekeeper” 

Under the DMA, WhatsApp’s owner Meta is regarded as being a “gatekeeper”, i.e. a large tech company that controls access to key digital services, such as messaging platforms, operating systems, or social networks. These companies have a significant impact on the market and must comply with strict rules to ensure fair competition. Gatekeepers like Meta are therefore required, under the DMA, to open up their services (e.g. WhatsApp and Messenger) to allow interoperability with smaller platforms, as well as follow regulations on data handling, user privacy, and transparency.

No Need To Install The Other Apps 

With this change, although WhatsApp and Meta’s Messenger must open up their platforms to allow messages to flow between different apps, a WhatsApp user will be able to communicate with someone on Telegram or Signal without needing those apps installed.

Will Make It Simple For Users

Meta says it has designed a simple onboarding flow for users where they can learn more about third-party chats and turn the feature on which means that although it’s mandatory to open the apps up, the feature still has an opt-in element, to help users avoid risks like spam and scams. For example, users will have the option to choose which third-party apps they want to receive messages from, and how they would like to manage their inbox.

Can Keep Third-Party App Messages Separate 

Meta says users will have the option to be able to keep third-party chats separate from their current inbox, or to combine all chats in a single inbox. For example, users will be able to have third-party messages delivered into a separate folder if they wish.

Two Years In The Making 

Meta says it’s been working on getting the interoperability ready for two years. The change, however, is still being tested, with full implementation expected to start in late 2024, although features will gradually roll out over time. Meta says it has built new notifications into WhatsApp and Messenger that will inform users about third-party chats and will “remind users each time a new third-party messaging app becomes available.” 

Basic one-on-one messaging and file-sharing features, such as text, images, videos, and voice notes, are expected to be ready soon. Group chats and voice/video calls will be added later, with group chats pencilled-in for 2025 and calls by 2027.

Maintaining E2EE 

Meta has been somewhat reluctant about this change but is committed to complying with the DMA’s requirements. The company has stressed the need to maintain end-to-end encryption (E2EE) throughout this integration, although it has acknowledged challenges in ensuring security when third-party services are involved.

For example, Meta has said to send messages, the third-party providers must construct message ‘protobuf’ structures (protocol buffers that define how messages are formatted) which are then encrypted using the Signal Protocol and then packaged into message stanzas in eXtensible Markup Language (XML). Meta says the Signal Protocol is required because of its high level of security.

What Does This Mean For Your Business? 

For Meta, with its WhatsApp and Messenger platforms, this shift toward interoperability marks a really significant transformation. As a designated “gatekeeper” under the DMA, Meta is (reluctantly) being compelled to adapt to a more open and collaborative environment. While the company has expressed some hesitation, particularly around ensuring the privacy and security of cross-platform communications, it is clear that complying with the DMA is essential for maintaining its strong position in the European market. The challenge lies in balancing user security with the seamless integration of different messaging platforms, a feat Meta is tackling through encryption protocols and new user control features. Long-term, this could push Meta towards further innovation, as competition intensifies in a more diversified and open messaging landscape.

For competitors like Telegram, Signal, and other smaller messaging apps, the changes present both an opportunity and a challenge. These platforms now have the ability to interact with WhatsApp’s vast user base, opening doors for increased visibility and growth. However, to ensure secure communication and match the standards set by Meta, these platforms will need to meet stringent security and technical requirements. The market itself is likely to see a shift toward greater collaboration between apps, but with increased competition to offer superior services and features, such as privacy tools or unique messaging options.

Featured Article : ‘Pay or Consent’ Model Breaches Rules

Posted on by Paul Stradling

Following an investigation into whether the big tech companies are complying with the new Digital Markets Act (DMA) rules, the European Commission’s preliminary findings say that Meta’s ‘Pay or Consent’ model for data-sharing is in breach of its new rules.

Investigation 

The European Commission (EC) launched an investigation into Google, Apple, and Meta to determine if their practices comply with the DMA. This (still ongoing) inquiry has been focused on potential violations by these tech giants that may undermine fair competition and consumer protection in the digital market.

Google and Apple, for example, are under scrutiny over their app store policies and possible restrictions on third-party developers, which could inhibit competition. The investigation into Meta centres on its ‘pay or consent’ model.

The Commission is essentially aiming to ensure these companies do not misuse their ‘gatekeeper’ positions to engage in unfair practices, restrict consumer choice, or impose discriminatory conditions. The investigation could result in significant penalties and mandated changes to their business practices to comply with the DMA.

What Is Meta’s Pay Or Consent Model? 

The ‘pay or consent’ model is a business practice where users are given a binary choice between two options – either pay a fee for a service or consent to having their data collected and used for targeted advertising. In November 2023, in response to regulatory changes in the EU, Meta introduced its binary ‘pay or consent’ offer. This means that EU users of Facebook and Instagram must choose between: (i) the subscription for a monthly fee to an ads-free version of these social networks or (ii) the free-of-charge access to a version of these social networks with personalised ads.

The Preliminary Findings – Why Is ‘Pay or Consent’ Not Acceptable Under The DMA Rules? 

The European Commission says it has informed Meta of its preliminary findings that its ‘pay or consent’ advertising model fails to comply with the Digital Markets Act (DMA). The Commission says, in its preliminary view, “this binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta’s social networks”. 

According to the European Commission, Meta’s ‘pay or consent’ model breaches Article 5(2) of the Digital Markets Act (DMA) because:

– It doesn’t allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the “personalised ads” based service.

– It doesn’t allow users to exercise their right to freely consent to the combination of their personal data.

The EC says that to ensure compliance with the DMA, “users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalisation of advertising.” 

What Next For Meta? 

Further to being informed of the EC’s preliminary findings, Meta can now exercise its rights of defence, i.e. by examining the documents in the EC’s investigation file and replying in writing to the EC’s preliminary findings. The EC’s investigation is scheduled to conclude within 12 months from the opening of proceedings (on 25 March 2024).

What If Meta Is Found To Be Breaching EU Rules? 

If the EC’s preliminary views are found to be confirmed and it decides Meta’s model really doesn’t comply with Article 5(2) of the DMA, it could impose fines up to 10 per cent of Meta’s total worldwide turnover! For repeated infringement, this fine could even be increased to 20 per cent. In the extreme case of “systematic non-compliance”, the EC could take additional measures such as obliging Meta to sell a business (or parts of it) or to ban Meta from acquisitions of additional services related to the systemic non-compliance.

Constructive 

For the moment, however, the EC says it is continuing “constructive engagement with Meta” to identify a satisfactory path towards compliance.

What Does This Mean For Your Business? 

The European Commission’s investigation into Meta’s ‘pay or consent’ model is a significant development with broad implications for businesses in the UK and beyond. The Commission’s findings highlight the increasing regulatory scrutiny on how tech giants manage user data and the necessity for compliance with stringent data protection laws like the Digital Markets Act (DMA).

For Meta, this scrutiny could potentially lead to substantial operational and financial changes. If the investigation confirms the preliminary findings, Meta may face hefty fines, as much as 10 per cent of its global revenue, or even 20 per cent for repeated offences. Such financial penalties would not only impact Meta’s profitability but could also mean a restructuring of its business model in the EU – certainly things that Meta would want to avoid.

At the moment, however, these are only preliminary findings and ‘constructive’ negotiations are under way. It has nevertheless sent a warning shot across their bows that the EC is watching and is serious about enforcement from the outset, thereby underscoring the importance of adhering to regulatory requirements and maintaining transparent data practices.

Other big tech companies, particularly those operating within the EU, should take note of this investigation. The EC’s rigorous approach is also a signal of a broader regulatory trend that takes consumer rights and fair competition more seriously. Google, Apple, and similar companies must therefore ensure their policies align with DMA provisions to avoid similar investigations and potential penalties. This will mean proactive compliance strategies, where businesses regularly audit and adjust their data handling practices to meet evolving regulatory standards.

For UK businesses, particularly those in the tech and digital sectors, the implications are twofold. First, understanding and complying with EU regulations remains crucial, especially for businesses with a significant user base or operational presence in Europe. The DMA’s focus on fair competition and consumer protection could lead to stricter data governance requirements, necessitating adjustments in how data is collected, stored, and utilised.

Secondly, this development may offer a competitive edge to businesses that adhere to ethical data practices and who are transparent. By aligning with regulatory standards and demonstrating a commitment to user privacy, UK businesses can build trust and differentiate themselves in a market increasingly concerned with data protection.

In essence, therefore, this ongoing investigation into Meta’s practices (as well as Google and Apple) serves as a reminder of the critical importance of regulatory compliance in the digital age, and that the EU area is getting serious about data protection and competition where tech firms are concerned. Businesses should, therefore, stay informed about legal developments, proactively engage with regulatory frameworks, and pay serious attention to matters of user privacy and data governance.

Tech News : Booking.com Becomes “Gatekeeper”

Posted on by Paul Stradling

Online travel marketplace, Booking.com, has been designated a ‘gatekeeper’ company by the EU under its new Digital Markets Act (DMA) competition law, meaning that Booking.com now has six months to comply.

Gatekeepers? 

Under the EU’s new Digital Markets Act (DMA), ‘gatekeepers’ are large digital platforms that play a pivotal role in the digital economy. They are judged as acting as intermediaries between businesses and users, i.e. controlling key ‘gateways’ through which businesses reach consumers. The DMA, which is aimed at tackling monopolising practices and ensuring fair and open digital markets, sets specific criteria to identify these gatekeepers and imposes obligations and prohibitions on them to prevent anti-competitive practices.

Why Booking.com? 

According to the DMA rules, ‘gatekeepers’ are companies within the EU with more than 45 million monthly end users, more than 10,000 business users per year, and a market cap of at least €75bn.

It seems, therefore, that following a self-assessment (submitted on March 1), the EC has decided that the Booking.com travel platform meets the DMA thresholds and, therefore, is now considered to be an “important gateway between businesses and consumers.” 

Thierry Bretton, EU Commissioner for Internal Market, has been reported as saying: “Booking is an important player in the European tourism ecosystem and is now also a designated gatekeeper.” 

What Does This Mean For Booking.com? 

As a gatekeeper, Booking.com now faces specific obligations under the DMA to ensure fair competition and prevent anti-competitive practices. These include:

– Data usage restrictions. Booking.com cannot, for example, use data from business users (e.g. hotels) to compete against them.

– Interoperability. It must allow third parties to interoperate with its services, providing necessary technical access.

– Advertising transparency. Booking.com must offer advertisers and publishers access to performance measurement tools for independent ad verification.

– An anti-tying and bundling obligation means no additional services as a condition for accessing its platform.

– Access to data. Booking.com must provide business users with access to the data they generate on the platform.

– Fair treatment. The company can’t favour its own services or products in search rankings over third-party offerings.

Practical Implications 

There are also some practical implications for Booking.com, including:

– Operational adjustments which include significant changes to internal operations, data management, and platform functionalities.

– Increased transparency, e.g. enhanced transparency in ranking, data usage, and advertising charges.

– Additional legal, administrative, and technological expenses to ensure compliance.

– A change to its competitive landscape as the restrictions under the DMA may reduce competitive advantages, levelling the playing field for smaller competitors.

– Increased regulatory scrutiny such as monitoring plus potential penalties from the European Commission for non-compliance.

What Happens If It Doesn’t Comply? 

Booking.com now has 6 months to comply but if it doesn’t, it could be facing eye-watering fines of up to 10 per cent of its total worldwide annual turnover, increasing to 20 per cent for repeat offences. Also, it could face periodic penalties up to 5 per cent of its average daily turnover for specific non-compliance issues. To put this in perspective, Booking.com (as part of Booking Holdings) reported a total worldwide turnover of $21.3 billion in 2023.

It’s understood that Booking.com and other gatekeepers have already started implementing measures to comply with their gatekeeper obligations under the DMA and are required to submit detailed compliance reports to the European Commission. However, other companies, like ByteDance (TikTok’s owner) and Meta, have contested their gatekeeper designations

Who Are The Other Gatekeepers? 

In addition to the aforementioned ByteDance, Meta, and now Booking.com, other well-known gatekeepers include (not surprisingly) Alphabet (Google), Apple, Amazon, and Microsoft.

Following X’s claim (submitted on 1 March 2024) that, despite meeting the thresholds, it doesn’t qualify as an important gateway between businesses and consumers, it’s understood that the European Commission has opened a market investigation to further assess X’s rebuttal.

What Does This Mean For Your Business? 

The designation of Booking.com as a gatekeeper under the EU’s Digital Markets Act (DMA) represents another significant shift in the regulatory landscape for large digital platforms. For Booking.com, this means it must adhere to stringent new rules aimed at ensuring fair competition and preventing the misuse of its market power. This could, however, involve substantial operational adjustments.

For competitors and markets, the DMA’s enforcement may lead to a more balanced competitive environment. Smaller businesses/competitors and new entrants may, for example, find it easier to compete if the ‘gatekeepers’ like Booking.com are restricted from engaging in the many possible anti-competitive practices, e.g. data misuse and unfair bundling of services. This could, of course, foster greater innovation and diversity in the market, as barriers to entry are lowered and smaller companies gain more opportunities to attract customers.

Consumers are also likely to benefit from the DMA’s regulations. For example, with increased transparency in how services are ranked and advertised, they may be able to make more informed choices. The DMA’s requirement for fair treatment and data access may mean that consumers see a wider variety of options and potentially lower prices as competition increases. Also, enhanced data protection measures could help safeguard consumer information, addressing privacy concerns that have become increasingly prominent in the digital age.

Overall, the implementation of the DMA and the compliance efforts by gatekeepers like Booking.com may signal a transformative period for digital markets. UK businesses operating within these markets should prepare for changes in competitive dynamics and be ready to leverage new opportunities that arise from a potentially more equitable digital ecosystem.