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Tag: DMA

  • The Walled Garden Cracks: Apple to Allow Third-Party App Stores

    The Walled Garden Cracks: Apple to Allow Third-Party App Stores

    Apple’s walled garden is finally beginning to open, with the company preparing to allow third-party app stores to comply with EU legislation.

    Apple famously maintains control of its iOS ecosystem, forcing developers to use its App Store as the primary means of distributing apps. Despite attempts to force Apple to allow third-party app stores, or other means of side-loading apps, the company has so far refused to bow to the pressure.

    A new report by Bloomberg, however, indicates the EU’s latest regulation may finally force the company to open up. Apple’s software engineers are reportedly already at work trying to make the necessary changes to iOS in time for the 2024 deadline.

    The EU’s Digital Markets Act (DMA) is one of the most comprehensive attempts to reign in Big Tech’s power and influence. The bill is aimed at “gatekeeper” companies that control entire platforms, putting Apple and Google squarely in the crosshairs.

    The DMA is designed to level the playing field for smaller companies, preventing gatekeepers from preferring their own apps and services over third-party options. The DMA would also force platforms to ensure their services, such as messaging services, “open up and interoperate with smaller messaging platforms, if they so request.”

    While the DMA only impacts the EU, it’s only a matter of time before other jurisdictions follow the EU’s playbook and pass similar regulation. As a result, the DMA represents the first crack in Apple’s walled garden, a crack that will likely bust it wide open.

  • Apple Could Be Forced to Tear Down Its Walled Garden

    Apple Could Be Forced to Tear Down Its Walled Garden

    The European Union (EU) has passed legislation that could be the single biggest threat to Apple’s walled garden.

    The EU approved the Digital Markets Act (DMA) in March 2022, legislation that is aimed at so-called “gatekeeper” companies. Gatekeepers are companies that run a “platform,” have at least 45,000 active users, and a market cap of at least $82 billion.

    The DMA’s goal is to prevent gatekeeper companies from preferring their own apps or services over those of competitors. In addition, the legislation would ensure users could choose the default apps of their choice.

    The DMA went into effect Tuesday and could completely upend how Apple does business. According to MacRumors, the DMA could force Apple to allow third-party app stores, allow users to sideload apps, and even make iMessage compatible with other messaging services.

    Although the DMA went into effect Tuesday, there are several implementation steps before companies are required to comply. Once the various steps are taken, companies impacted by the DMA will be required to comply by March 6, 2024, at the latest.

    While the legislation promises to address many of the inequities with Big Tech, experts worry that it may cause as many problems as it solves. In particular, the requirement that companies make their messaging apps interoperable with competing services could open a Pandora’s Box of problems.

    Because many messaging services use end-to-end encryption (E2EE), exports worry that the DMA will force companies to weaken, or outright break, encryption in an effort to pass messages from one service or another. There is also the possibility that companies may simply decide it is too difficult to maintain cross-platform encryption and abandon it altogether.

    There are still many unanswered questions about how the DMA will operate, including whether it will hold up to legal challenges. In our previous coverage, we quoted a Facebook engineer’s statement to The Verge regarding the issues the DMA raises:

    “If you went into a McDonald’s and said, ‘In the interest of breaking corporate monopolies, I demand that you include a sushi platter from some other restaurant with my order,’ they would rightly just stare at you,” Alec Muffett, former Facebook engineer and internet security expert, said. “What happens when the requested sushi arrives by courier at McDonald’s from the ostensibly requested sushi restaurant? Can and should McDonald’s serve that sushi to the customer? Was the courier legitimate? Was it prepared safely?”

  • US May Follow EU in Crackdown on Gatekeeper Tech Companies

    US May Follow EU in Crackdown on Gatekeeper Tech Companies

    The US may soon follow the EU in cracking down on gatekeeper companies, as governments become increasingly wary of Big Tech.

    The EU introduced the Digital Markets Act (DMA) in late March, its most comprehensive attempt to rein in Big Tech’s power. Gatekeeper companies — companies that run a “platform,” have a market cap of at least $82 billion, and at least 45,000 active users — are especially addressed by the DMA. For example, the DMA would require messaging platforms to open up and work with smaller competitors, and could even force companies to break up if they fail to comply with the legislation’s terms.

    Despite many concerns about the DMA’s implications, especially in the realm of security, the US may be preparing to follow the EU’s example, according to Bloomberg, especially when it comes to mergers and acquisitions.

    “The plain text of our merger laws in the United States demand that we have aggressive enforcement against acquisitions by firms that already possess a dominant position,” said Jonathan Kanter, head of the DOJ’s antitrust division.

    It remains to be seen if the US will follow through, especially given the fact it tends to be more lenient on corporations than the EU. It is also unclear how far the US may emulate the DMA, and whether it would also press for interoperability clauses.

  • Experts Warn the EU’s DMA Will Break Encryption

    Experts Warn the EU’s DMA Will Break Encryption

    Another day, another attack on encryption, with security experts warning the EU’s DMA legislation will likely break, or severely weaken, encryption.

    The EU unveiled the Digital Markets Act (DMA) as its latest effort to crack down on Big Tech. In addition to severe fines, and even possible breakups, of companies that fail to abide by the legislation, the DMA calls for “gatekeeper companies” to make their services interoperable with smaller rivals.

    Messaging, in particular, is one of the most obvious areas impacted by this clause, with services like WhatsApp, Facebook Messenger, and Apple’s iMessage likely forced to open up and work with competitors. Unfortunately, since all of these services provide end-to-end encryption (E2EE), experts warn there is no easy way for the the services to work with each and still maintain the level of security and privacy they currently offer.

    In speaking with The Verge, one expert used a very low-tech example to illustrate the issues, especially with compatibility and accountability between various services.

    “If you went into a McDonald’s and said, ‘In the interest of breaking corporate monopolies, I demand that you include a sushi platter from some other restaurant with my order,’ they would rightly just stare at you,” Alec Muffett, former Facebook engineer and internet security expert, said. “What happens when the requested sushi arrives by courier at McDonald’s from the ostensibly requested sushi restaurant? Can and should McDonald’s serve that sushi to the customer? Was the courier legitimate? Was it prepared safely?”

    Similar questions plague potential implementation of the DMA. How will messages be securely sent across various platforms? If two different services use two different types of encryption, which company will modify its service to be compatible with the other? Will services opt to simply drop encryption when sending messages across services? Or will companies adopt some method of decrypting and re-encrypting as the message is passed from one service to another, making the communication vulnerable to interception, and thereby compromising privacy and security?

    Unfortunately, as has been stated time and time again, the encryption protocols people, companies, and governments rely on for privacy and security are not created, managed, or dictated by policies. They are, instead, bound and constrained by basic mathematics.

    Unfortunately for privacy and security, the mathematics of the DMA don’t quite add up.

  • EU Prepares to Crack Down on Big Tech, Unveils Sweeping Measures

    EU Prepares to Crack Down on Big Tech, Unveils Sweeping Measures

    The European Union has unveiled sweeping measures to crack down on Big Tech and increase competition across the industry.

    The EU has unveiled the Digital Markets Act (DMA), aimed specifically at “gatekeeper” companies, according to The Verge. Gatekeepers are companies with a market cap of at least $82 billion, at least 45,000 active users, and that run a “platform.” Such criteria would cover Amazon, Apple, Google, Meta, and Microsoft, but could also cover smaller companies and services as well.

    Messaging, in particular, is a likely focus of the DMA, with the EU looking to force services like Facebook Messenger, iMessage, and WhatsApp to “open up and interoperate with smaller messaging platforms, if they so request.”

    The DMA would include a number of other provisions, including stopping gatekeepers from preferring their own apps and services, as well as giving users the ability to uninstall default apps that come on their devices, and even choose which apps they want to use during install and setup.

    Companies that sell or do business on a given platform would be entitled to access performance metrics from that platform. Similarly, companies that advertise on a platform would be given a way to independently confirm the performance of their advertising efforts.

    The penalties for failure to comply would be severe, including up to 10% of a company’s annual worldwide revenue and periodic penalties up to 5% of its daily earnings. Most notably, the EU would also have the authority to enforce “behavioral and structural remedies.” This could including mandating that a company change how it operates its platform or service, and could even include forcing a company to spin off portions of its business, if the anti-competitive concerns cannot otherwise be addressed.

    This is why, in the Digital Markets Act, there is a full toolbox where the sanctions become more and more severe,” the EU’s Commissioner for Competition, Margrethe Vestager told The Verge. “The fines will increase if you do not implement changes. Eventually, in the toolbox, there’s also the tool that you can actually break up a company if no change is happening, or if you are a repeat offender.”

    The DMA represents the single largest effort by the EU to reign in the power and influence of Big Tech, combining a number of different efforts into one comprehensive piece of legislation. The legislation has not passed yet but, given the momentum that’s been building in the EU, it’s almost certainly going to pass sooner rather than later.

  • EU Poised to Crack Down on Tech Giants

    EU Poised to Crack Down on Tech Giants

    The European Union is poised to introduce the Digital Services Act (DSA) and Digital Markets Act (DMA), with everything from fines to breakups on the table for tech companies.

    The EU is widely seen as more consumer friendly than the US and takes a tougher stance against corporations. The proposed legislation is no different, with stiff penalties ranging from fines to potential breakups, according to Reuters.

    The DSA is focused on making tech companies be more transparent about their algorithms, advertising and efforts to fight harmful content, hate speech and counterfeit products on their platforms.

    The DMA, in contrast, focuses on online gatekeepers and will help ensure a level playing field. Gatekeeper companies, such as those that operate app stores, will not be allowed to favor their own services. Gatekeepers will also be required to share specific data with competitors, as well as regulators.

    “We start with a fine, then you have a bigger fine, then you may have a temporary remedy, specific remedies, then you may have at the end of the day, what we have also in the competition rules, structural separation,” Digital Chief Thierry Breton told reporters during an online briefing.

    “So from fines to separations, but of course only on the European market,” he said.

  • More Marketers Turning To Digital Media For Brand Building

    More marketers are using digital media to sell and build stronger relationships with their customers according to a new report from the Direct Marketing Association and David Shepard Associates.

    Rus-Rempala The report found social networking sites to be the most used platform by digital media marketers. However, many businesses still consider themselves operating in the learning, transitioning, and integrating phases.

    ‘Not surprisingly, the study shows many companies are continually testing targeted messages across various media to find optimal cost efficiency and marketing effectiveness," said Rus Rempala of David Sheppard Associates. 

    "We expect to see much more advanced strategic testing in the near future as more and more marketers navigate the multichannel digital age."

    Highlights of the DMA report include:

    *Most marketers cite brand building (71%) as main purpose of their digital marketing

    *Direct mail still represents 17 percent of the overall marketing budget, which is larger than the share held by any other media.

    *35 percent of companies us CPM (cost per 1,000 impressions) to manage online programs.

    *The most frequent use of digital media for publishers is generating online sales.

    "Two findings come through loud and clear from this report," said George Orme from David Shepard Associates. 

    "First, most marketers today are using digital media to both sell and nurture a stronger bond with their customers.  But the study also underscored that very few companies have mastered the analytics and found ways to accurately measure the incremental effect of each media within a multi-media campaign." 
     

  • DMA Sues Colorado Over Internet Sales Tax Law

    DMA Sues Colorado Over Internet Sales Tax Law

    The Direct Marketing Association (DMA) has filed a lawsuit in federal court against Colorado challenging the constitutionality of a new law that requires online retailers outside the state to collect sales tax information from customers and turn it over to the state’s Department of Revenue.

    The DMA says the law constitutes an "unprecedented invasion of consumer privacy," and also unfairly discriminates against interstate commerce because the law is targeted at only out-of-state retailers.

    Jerry-Cerasale-DMA "The new law and the regulations implementing it are an unconstitutional and blatant violation of Colorado consumers’ privacy," said Jerry Cerasale, Senior Vice President, Government Affairs, DMA.

    "The law may have been passed in the hope of balancing the state budget through increased use tax reporting by Colorado residents, but it has serious adverse consequences for consumers and businesses."

    The DMA suit says the law and regulations violate both the United States Constitution and the Colorado Constitution.

    "Retailers that have no office, store, property, employees or other physical presence in Colorado are not obligated under Colorado law, and are protected by the commerce clause of the United States Constitution from being required to collect Colorado sales tax on retail sales to Colorado consumers," the lawsuit says.
     

  • DMA Says Privacy Bill Would Hurt Online Advertising

    The Direct Marketing Association has voiced its opposition to a draft of a privacy bill introduced this week by Representatives Rick Boucher (D-VA) and Cliff Stearns (R-FL).

    The DMA says the draft bill has potentially sweeping impacts for direct marketers working across every marketing channel, from direct mail and telemarketing to email, Internet and, mobile marketing.

    Linda-Woolley.jpg "DMA and other trade associations are in the process of implementing a significant new self-regulatory program that applies consumer-friendly standards to online behavioral advertising across the Internet, giving consumers meaningful notice and choices about the advertising they receive," said Linda Woolley, DMA’s executive vice president, government affairs. 

    "We should give this program a chance to work before legislating in this area.  We look forward to working further with Representatives Boucher and Stearns, as well as other lawmakers, to find the appropriate balance between consumer privacy and business innovation so that Internet commerce can continue to be a driving force for job creation in this difficult economy."

    Boucher says the draft bill is not aimed at hampering the use of advertising content and services on ecommerce sites.

    "Online advertising supports much of the commercial content, applications and services that are available on the Internet today without charge, and this legislation will not disrupt this well established and successful business model. It simply extends to consumers important baseline privacy protections," Boucher said.