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For years, a chorus of critics has argued Big Tech is too powerful, unaccountable, and anti-competitive. And for years, it’s seemed like they were shouting into a pillow. Antitrust legislation meandered in Congress, the tech giants continued to squeeze their competitors, and they added trillions in market cap in the process.
But now, the Big Tech antitrust movement is actually making real progress. On Thursday, the European Union adopted the Digital Markets Act, a landmark piece of legislation aimed at restoring the market competitiveness that the tech giants have hindered. One day earlier, Google (GOOGL) said it would allow some Android app developers to take payments directly, avoiding its Play Store’s processing and fees. After a long period of stagnation, these moves are breakthroughs.
“From now on, Big Tech companies must show that they also allow for fair competition,” said European Parliamentarian Andreas Schwab on Thursday. ”The time of long antitrust cases is over.”
The week’s most crucial reforms promote fairness in app stores, where the tech giants have wielded their power most acutely. Apple (AAPL) and Google’s dominance over app developers has enabled them to charge ‘taxes’ that no developer would pay in a fair market. To run an app on iOS or Android, app developers routinely pay 30% of their proceeds to Apple or Google, leading to increased prices for users and lower profits for their businesses. But now, the tech giants will have to back off their taxes, either by will or by force.
The EU’s Digital Markets Act, for instance, has a provision compelling the tech giants to allow users to install apps from outside platforms. So people in Europe could soon have an option to install apps from either the iOS App Store — where developers pay the tax — or go elsewhere and avoid it. This could open up legitimate competition between independent developers and Apple’s native apps, and lower the prices for apps more broadly.
“European consumers are on the verge of enjoying better protection than U.S. consumers,” said Luther Lowe, who’s spearheading Yelp antitrust push. “The ball is in America’s court to curb the most egregious forms of self-dealing by these trillion-dollar gatekeeper platforms.”
Already, Google is starting to implement a version of the EU’s reform globally. On Wednesday, it announced a partnership with Spotify (SPOT) that would allow Android users to sign up for Spotify’s service directly. Spotify will place its payment option right next to Google’s, giving users a choice — just like the free market.
Though Spotify will pay Google a fee for the privilege, it was happy to agree to it. The company said it met its “standard of fairness.” A spokesperson said Spotify would welcome a similar conversation with Apple, but it hasn’t heard anything from Cupertino.
As with GDPR, there will be messiness. Implementation of some of the EU’s new rules — especially around messaging app interoperability — could be treacherous. But this is what happens when an industry fails to self-regulate. The government can step in and do it for them.
We’re starting to see some moves that could’ve warded off the EU’s intervention — such as Google’s reform with Android — but it’s looking like it’s little too late. The tech critics had some valid points. And after seeming ineffective for some time, it’s clear they’re going to land some punches.
