The European Union (EU) is contemplating imposing new tech rules on Microsoft’s Bing and Apple’s iMessage. The EU is investigating if these services should comply with the Digital Markets Act (DMA), which mandates various obligations for major tech companies, including the allowance of third-party apps and app stores on their platforms.
Recently, the EU sent out questionnaires to assess the significance of Microsoft’s Bing and Apple’s iMessage compared to their competitors. Respondents were also asked to evaluate how these services fit into the companies’ ecosystems and their user base. This inquiry into Bing and iMessage has significant implications for the tech industry.
In the fast-paced world of technology, tech companies’ practices and offerings come under scrutiny, and Microsoft’s Bing and Apple’s iMessage are no exception. In this blog, we delve into the EU’s inquiry into these services and their classification under DMA. Let’s take a closer look at the implications of this inquiry for Microsoft, Apple and the tech industry as a whole.
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The Digital Markets Act (DMA)
The DMA is a set of rules and regulations designed to prevent major tech companies from stifling competition. It aims to ensure a level playing field for all players in the industry and promote innovation and consumer choice. DMA mandates major tech companies like Microsoft, Apple, Google, Amazon, Meta Platforms, and ByteDance to allow for third-party apps or app stores on their platforms.
In addition to this, they must make it easier for users to switch from default apps to rivals. The DMA also imposes reporting obligations, algorithmic transparency, and non-discrimination requirements. The primary reason for the DMA is to prevent gatekeeping practices of tech giants that can lead to an unfair advantage for the company.
Gatekeeping rights refer to the power held by some platforms to control access to a marketplace, including the ability to dictate terms to third-party suppliers, collect data, and block entry to competitors. This can severely increase competition, which may ultimately harm consumers. The DMA aims to promote fair competition in the digital sphere and ensure an environment conducive to innovation and growth.
Background of Microsoft’s Bing and Apple’s iMessage
Microsoft’s Bing search engine and Apple’s iMessage are two of the most widely used services worldwide. Bing is a search engine designed to compete with Google, while iMessage is a messaging application available on all Apple devices. Bing was launched in 2009 as a rebranded search engine for Microsoft Live Search and MSN Search.
Although it has considerably less market share than Google, Bing still serves millions of users worldwide, providing a user-friendly experience. iMessage, on the other hand, is an instant messaging platform created by Apple. Initially launched in 2011 and available on all Apple devices, it allows users to send messages, photos, and videos to other Apple device users for free.
It has become an integral component of the Apple ecosystem and is widely used by iPhone and iPad users. Both Bing and iMessage are essential services provided by the tech giants Microsoft and Apple. Their market share and significance are significant factors in understanding the potential implications of the EU’s inquiry into the applicability of the DMA to these services.
Contested Classification of Services
Microsoft and Apple have both contested the classification of their services, Bing and iMessage, respectively, as core platform services under the DMA. Their objection to the classification comes as the DMA mandates major tech players like them to allow third-party apps or app stores on their platforms and to make the transition easier for users to switch from default apps to rivals.
Microsoft and Apple believe that their services should not be classified under DMA due to a lack of evidence suggesting that they are gatekeepers with dominant market positions. However, the European Commission has responded to these controversies by stating that the services are not solely restricted to the operation of their hardware products but are integrated into a larger ecosystem of software and services.
Additionally, the regulators have argued that the services in question have significant user bases, and a lack of competition could lead to unfair advantages. The inquiry is ongoing, and it remains to be seen how the regulators will respond to Microsoft and Apple’s objections to their services being categorised under DMA. The potential implications of the inquiry could have significant consequences for the tech industry.
Questionnaires for Rivals and Users
As part of the inquiry into Microsoft’s Bing and Apple’s iMessage, the European Commission has sent out questionnaires to industry rivals and users. The purpose of these questionnaires is to evaluate the significance of Microsoft’s three services and Apple’s iMessage as compared to competing services.
Respondents were also asked about specific functionalities that business users rely on and how these services integrate into the overall ecosystem of the respective companies. Additionally, the questionnaire sought information regarding the user base of these services. The respondents were given a short time frame of less than a week to provide feedback.
The Commission aims to complete its investigation within five months. The information sought from respondents is crucial for the EU watchdog to assess the impact of possible regulation and the need for Microsoft and Apple to comply with DMA rules. The insights gathered will also help the Commission to evaluate whether these services constitute core platform services under the DMA.
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Implications of Possible Regulation
The inquiry into whether Microsoft’s Bing and Apple’s iMessage should adhere to the DMA has severe implications for the companies and the industry at large. Microsoft has a 3% market share on Bing in the EU, whereas Google dominates the search engine market with a 92% share. Also, read here about how Google lost $1m in the lawsuit.
If Bing falls under the DMA, Microsoft could be forced to allow rival search engines greater access to their platform, reducing its market share further. Similarly, Apple’s iMessage, which is pre-installed on all Apple phones, could be forced to provide easier access to rival messaging apps, affecting their user base.
Third-party tech companies could benefit immensely from these potential regulations. The DMA mandates major tech companies to allow for third-party apps or app stores on their platforms, leading to a level playing field among tech companies. If Microsoft and Apple fall under these regulations, smaller tech firms that have previously struggled to compete can step up to the plate and have a fair chance at competing.
Final Thoughts
The EU inquiry into whether Microsoft’s Bing and Apple’s iMessage should conform to the DMA has raised several significant issues. With questionnaires dispatched to rivals and users, the investigation aims to determine the importance of these services in comparison to alternatives, their implications for business users, and how they integrate into their respective ecosystems.
If new regulations are applied, this could have sweeping effects on third-party apps and app stores, as well as Microsoft and Apple’s market positions. This inquiry underscores the growing scrutiny that tech companies face as governments seek to increase their regulation.
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