Zuckerberg to Disrupt Google and Apple App Store Dominance

The E.U.'s Digital Markets Act intends to weaken the monopolies of the biggest internet companies—Meta included. In this case, it is helping expand Meta's business.

Mark Zuckerberg looks past the camera wearing a gray shirt.
Mark Zuckerberg speaks at the Paley Center For Media in 2019. Getty Images

Meta (META) is gearing up to offer app downloads directly from advertisements in its Facebook app, according to the Verge. Set to be available in the E.U., the move challenges Apple (AAPL)’s and Google (GOOGL)’s hold on the app store industry.

The opportunity for Meta to expand its business arose from the Digital Markets Act (DMA), an E.U. law passed last year that curbs the power of big internet companies. The law considers Google and Apple gatekeepers in the apps industry, and is requiring them to make way for third party app stores on their devices. Companies must comply with the law by March 6, 2024 or face fines of up to 10 percent of the company’s annual revenue. For repeat infringements, the E.U. can fine up to 20 percent.

“We’ve always been interested in helping developers distribute their apps, and new options would add more competition in this space,” Meta spokesperson Tom Channick told the Verge. “Developers deserve more ways to easily get their apps to the people that want them.” Meta didn’t immediately respond to Observer’s request for comment.

The DMA intends to weaken the monopolies of the biggest internet companies—Meta included. It will require Meta to obtain consent from users before showing them targeted ads based on their personal data, which is a huge money-maker for the social media company. In the three months ending March 31, Meta’s advertising business earned $28.1 billion, or 98 percent of its total revenue during that time, according to the company’s earnings statement. The law could also require Meta make changes to WhatsApp, its digital messaging property. The company may have to allow users of rival services like Signal or Telegram to message through WhatsApp, according to the New York Times. But in the case of the app stores business, which Google and Apple dominate, the DMA could allow Meta to expand its operations into new territory.

For 15 years, Apple has only allowed app downloads through its own App Store. It charges a 30 percent fee for in-app purchases from developers who earn at least $1 million through the App Store on an annual basis. For smaller developers, Apple charges 15 percent. The practice has drawn criticism in recent years, especially from Twitter owner Elon Musk, who said Apple’s “30% tax on the Internet” is “literally 10 times higher than it should be.”

Meta CEO Mark Zuckerberg has weighed in as well. “Apple has sort of singled themselves out as the only company that is trying to control unilaterally what apps get on a device,” he said at the New York Times DealBook summit last year. “I don’t think that’s a sustainable or good place to be.” Apple has defended its approach, citing safety concerns. By opening Apple products to third-party app downloads, developers could sidestep Apple’s fee. Meta won’t take a cut of in-app revenue when users download products from Facebook, at least in the beginning, according to the Verge.

Android, a property of Google, already allows users to download apps from third parties but has barriers to do so in the name of safety. It warns users that some apps can “view and control the screen” and “view and perform actions” on a user’s behalf, which could deter users from downloading an app. In a recent update, Google blocked the ability for certain third-party apps to use its Accessibility API, which offers additional app capabilities to users with disabilities, like screen-reading software. The API can also be abused by malicious parties looking to steal data, which is the basis for Google’s crackdown.

Meta will begin showing ads with app-downloading features on Androids later this year at the earliest, according to the Verge. It is unclear when the ads will become available on Apple products. Microsoft also has plans to build an app store that could rival Apple’s and Google’s, the Financial Times reported.

Meta’s feature will only apply to users in the E.U., where the DMA regulates. But it could soon expand to other territories. Japan is looking to open Apple’s and Google’s app stores to competition, the Japan Times reported this month. The Biden Administration also issued a report earlier this year that said Apple’s and Google’s market dominance in the apps industry was harmful to developers and consumers. The report offered suggestions to create a more level playing field for competitors and urged Congress to pass laws on the issue, but actual legislation could be slow. Senator Richard Blumenthal, a Democrat from Connecticut, introduced the Open App Markets Act, which would address app store dominance, in 2021, but it failed to pass into law by the January 2023 deadline. Senator Blumenthal will reintroduce the bill this Congressional session and increase his efforts to pass it, he said on Twitter.

Zuckerberg to Disrupt Google and Apple App Store Dominance