The European Union is aggressively enforcing the Digital Services Act (DSA) and the Digital Markets Act (DMA) to curb the unchecked power of global tech giants, with potential fines reaching up to 20% of annual global turnover for repeated non-compliance.
Laws with teeth big enough to bite Big Tech?
Both regulations represent a significant escalation in digital oversight. While the DSA carries penalties of up to 6% of global annual turnover, the DMA is even more stringent, allowing for fines up to 10%—or 20% for repeat offenses—potentially amounting to billions of dollars.
The DSA targets Very Large Online Platforms (VLOPs), a category that includes Amazon, Shein, Temu, Apple, Google, and major social networks like Meta’s platforms, TikTok, and X. The European Commission holds centralized authority over these giants to prevent “forum-shopping,” ensuring uniform enforcement across the bloc.
The DMA, meanwhile, focuses on “gatekeepers.” Currently, seven companies—including Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, and Booking.com—fall under this regime. These rules govern critical infrastructure like operating systems and messaging services, often forcing companies to allow interoperability and third-party access.
Shooting for a digital market reboot
The EU’s primary objective is to dismantle anti-competitive behaviors that stifle innovation and diminish consumer choice. By addressing ad-funded models that thrive on polarization and forcing platform accountability, the bloc aims to foster an environment where startups can compete fairly against entrenched monopolies.
The DSA and DMA take a different approach to Big Tech
The DSA prioritizes transparency, requiring platforms to maintain ad archives and provide researchers with data access. The DMA takes a more prescriptive “dos and don’ts” approach. For instance, Apple has been forced to allow app sideloading in the EU, and Meta is mandated to build infrastructure for messaging interoperability, allowing users on smaller platforms to communicate with WhatsApp users.
Despite these mandates, companies are pushing back. Apple’s introduction of a “Core Technology Fee” and Meta’s “pay or consent” model are currently under scrutiny as potential attempts to circumvent DMA requirements.
List of DMA investigations opened to date
Apple: The Commission is investigating Apple’s App Store steering rules, Safari choice screens, and the legality of the Core Technology Fee. Preliminary findings suggest Apple is failing to allow developers to freely inform users of cheaper purchase options.
Alphabet/Google: EU regulators are probing Google for self-preferencing in search results and steering policies within the Google Play Store.
Meta: Meta’s “pay or consent” model, which forces users to choose between tracking-based ads or a paid subscription, was flagged in July 2024 as a likely breach of the DMA.
DSA: EU investigations on VLOPSE
X (Twitter): Under investigation since December 2023, X faces scrutiny over content moderation, “dark patterns” in its blue-check system, and inadequate data access for researchers.
TikTok: Probes are ongoing regarding the protection of minors and addictive design features, such as the now-suspended “TikTok Lite” rewards system.
AliExpress: The marketplace is being investigated for failing to mitigate risks related to illegal content and non-compliant product listings.
Meta: Facebook and Instagram are under the microscope for potential breaches of election integrity and opaque political advertising policies.
Penalties and impacts
The EU recently concluded its first DSA case by accepting binding commitments from TikTok regarding its rewards feature. While no formal fines have been issued yet, the mere threat of regulatory action is already forcing operational changes.
However, the impact remains a work in progress. Big Tech firms have occasionally responded by stalling, such as Apple and Meta delaying the launch of new AI features in the EU, citing regulatory uncertainty. The long-term success of these “digital market resets” will depend on the Commission’s ability to navigate these legal and technical battles in the months and years ahead.
