Apple and Microsoft have argued with Brussels that some of their services are insufficiently popular to be designated as “gatekeepers” under new landmark EU legislation designed to curb the power of Big Tech.
Brussels’ battle with the two US companies over Apple’s iMessage chat app and Microsoft’s Bing search engine comes ahead of Wednesday’s publication of the first list of services to be regulated by the Digital Markets Act.
The legislation imposes new responsibilities on tech companies, including sharing data, linking to competitors and making their services interoperable with rival apps.
Platforms with an annual turnover of more than €7.5 billion, a market cap above €75 billion and active monthly users in the EU of 45 million will fall under the rules, though Brussels has some discretion over the designation beyond these metrics.
Microsoft had rejected the idea that Bing should be subject to the same obligations placed on its much larger rival, Google Search, said two people with direct knowledge of the matter.
Microsoft was unlikely to dispute the designation of its Windows operating system, which dominates the PC industry, as a gatekeeper, these people said. But it has argued that Bing has a market share of just 3 per cent and further legal scrutiny would put it at a greater disadvantage.
If covered by the new rules, Bing would need to give users a choice of other search engines, including Google’s. Advisers have argued in Microsoft’s defence that this could end up boosting Google’s market share.
Separately, Apple argued that iMessage did not meet the threshold of user numbers at which the rules applied and therefore should not comply with obligations that include opening the service to rival apps such as Meta’s WhatsApp, said the two people.
Analysts have estimated that iMessage, which is built into every iPhone, iPad and Mac, has as many as 1 billion users globally, but Apple has not disclosed any figures for several years. The decision is likely to hinge on how Apple and the EU define the market in which iMessage operates.
The European Commission, Apple and Microsoft declined to comment.
All large US tech companies, including Amazon, Google and Meta, will have several of their services regulated under the DMA, people familiar with the legislation said. Chinese-owned TikTok will also be part of the list.
Meta’s Instagram and Facebook and Google’s search engine are all expected to be covered by the new rules, which are aimed at opening up markets and enabling competition from European start-ups.
Brussels is still deliberating over the inclusion of iMessage and Bing in the final list. The European Commission may open a probe to determine if these services should face the new obligations set out in the DMA.
The designation of the services is part of a long-running process of implementing the landmark rules, which become fully applicable next spring. The commission is already bracing itself for legal challenges before the EU courts in Luxembourg over its decisions.
“The DMA will bring new competition to digital markets in Europe and now it is up to the commission to make it work,” said Andreas Schwab, the MEP who led negotiation of the rules.
This is not the first time tech companies have openly defied the European Commission, the EU executive, over digital rules. German online retailer Zalando and US tech giant Amazon have already taken the commission to court over allegations they are being unfairly targeted by the Digital Services Act, a second piece of digital legislation designed to set new standards to police the internet.
Legal fights between tech giants and EU regulators come at a time of heightened scrutiny over their alleged anti-competitive behaviour. This year Brussels threatened to break up Google over its alleged illegal practices in the adtech space.
Copyright The Financial Times Limited 2023
