The Digital Markets Act (DMA) hints at new promising paths for apps and platforms of diverse scales and maturities. From promises and rules of DMA to how the tech giants are responding, here’s a lowdown on how the DMA is shaking up the scene for mobile marketers.
The European Union's Digital Markets Act (DMA) is stepping up to shake the big tech playground—think Google, Apple, Meta, and the usual suspects that are (like it or not) shaping our lives.
The new act, which many of us have been fearing or eagerly anticipating, is finally in effect. Sooner or later, it’s expected to mix things up for mobile marketers and app developers, changing the game in how we plan our moves and strategies.
Through Purchasely's lens, the article dives deep into the DMA, breaking down its impact and the opportunities it creates for app monetization.
European Commissioner for Internal Market Thierry Breton (Photo Credit: AP News)
DMA introduces some approaches to regulating major digital platforms, ensuring a fairer digital market. The initiative targets tech giants, aka "gatekeepers", aiming to foster competition, innovation, and protect consumer interests.
DOs:
DON'Ts:
The Digital Markets Act (DMA) can reshape the competitive landscape of the mobile app market, impacting the operations of "gatekeeper" platforms and offering new opportunities for apps and platforms of diverse scales and maturities. Let's explore some specific DMA provisions and how they open up new avenues.
(source: Official Journal of the European Union)
1. Fair(er) play in the app world
What the DMA says: The gatekeeper shall not require end users to use, or business users to use, to offer, or to interoperate with, an identification service, a web browser engine or a payment service, or technical services that support the provision of payment services, such as payment systems for in-app purchases, of that gatekeeper in the context of services provided by the business users using that gatekeeper’s core platform services.
Impact: Before the DMA, browser apps were required to rely on the same WebKit engine used by Safari (WebKit = rendering engine for HTML pages), limiting their ability to differentiate from it. Additionally, users were unable to select their default web browser app as they can on a computer. The DMA has mandated that Apple allow alternative rendering engines besides StoreKit, and starting with iOS 17.4, users are now prompted to choose their default web browser.
2. Interoperability for enhanced services
What the DMA says: The gatekeeper shall not prevent business users from offering the same products or services to end users through third-party online intermediation services or through their own direct online sales channel at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper.
Impact: Before the DMA, only Apple's Wallet app could use iOS's contactless payment transaction APIs, excluding other banks. However, from iOS 17.4 onwards, banks can now access these APIs to enable contactless payments within their apps. This opens up many new possibilities, like direct person-to-person payments or NFC transactions with compatible terminals. Users can also select their preferred contactless payment app and initiate payments by double-clicking the side button, a feature previously exclusive to Apple Pay.
3. Access to data for informed decisions
What the DMA says: Article 6(9) mandates gatekeepers to provide end users and third parties authorized by an end user, at their request and free of charge, with effective portability of data provided by the end-user or generated through the activity of the end user in the context of the use of the relevant core platform service, including by providing, free of charge, tools to facilitate the effective exercise of such data portability, and including by the provision of continuous and real-time access to such data.
Example scenario: A young travel app, for example, can now access and analyze advanced data to refine its offerings, improving personalized recommendations. This can lead to better user experiences and more conversions.
4. Sideloading and direct distribution
What the DMA says: The gatekeeper shall allow end users to access and use, through its core platform services, content, subscriptions, features or other items, by using the software application of a business user, including where those end users acquired such items from the relevant business user without using the core platform services of the gatekeeper.
Example scenario for apps: An independent game developer can bypass the usual app store restrictions and fees by opting to distribute their game through an alternative store to the official Apple App Store, agreeing to the alternate terms for apps. By doing so, they avoid the 30% fees on in-app transactions, shifting instead to a fee per download—known as the Core Technology Fee—for any downloads exceeding 1 million per year.
Example scenario for platforms: Consider the Epic Game Store scenario. By offering games directly to users, Epic can enable competitive pricing and unique deals, attracting gamers seeking alternatives to Google and Apple's app stores. This approach diversifies the gaming ecosystem and exemplifies how digital marketplaces can enjoy greater operational freedom under the DMA.
The DMA is supposed to make the digital playground fairer, giving smaller players a better shot at success. While all six big names have turned in their compliance reports to the European Commission, whether it'll really shake up the current status quo is still up in the air.
Those reports also vary in the detail and the legitimacy they offer. Some gatekeepers went all out, detailing their plans over hundreds of pages, while others maintained what they’d already shared in the past.
ByteDance and Apple, for example, missed out on their Consumer profiling report.
Indeed, the new act has just recently rolled out. Yet this is also a crucial time for app businesses to stay alert, join in on the conversations about these new rules, and be ready to switch up their game plans based on how things pan out.
If you're following the DMA developments, you've probably caught wind of how Apple's been responding. Apple's significant role in app monetization makes its response to the DMA especially noteworthy.
Here's what's been happening with Apple:
DMA compliance efforts: Apple has announced its plan to adjust its business practices in Europe to comply with the DMA. However, skepticism exists within the app development community about the real impact of these changes, particularly after Apple's issue with Epic Games and Fortnite.
Epic Games vs Apple saga: Just before the DMA compliance deadline, Apple revoked Epic Games' developer account, preventing access to the Epic Games Store on iOS. This move was controversial and seemed to go against the DMA's objectives. But after the European Commission intervened, Apple reversed its decision and reinstated Epic's account. The situation may seem like a win for the DMA but highlights the challenges in enforcing the new regulations.
Let's adopt a 'wait and see' approach and hold steady for now—it's much too early to jump ship and commit to the new payment terms, especially since there's no rush with no hard deadline for acceptance. Notably, switching to the new terms addendum would irreversibly apply to the entire developer account, encompassing all apps created by the same developer. Considering the Core Technology fee, this move could pose a significant risk. For the first time in the history of our app, we could end up paying more to Apple than we actually earn, especially if our app sees a high volume of downloads but maintains a profitability per user below 0.5 cents.
Before you rethink your in-app payment strategies, consider this: Opting for alternative payment methods might seem appealing with a reduced fee of 27% (down from 30%), but there's a catch. You're limited to offering it at just one spot within your app. Plus, users will face a daunting modal that could spike their anxiety before they're even redirected to your website. Once there, the need to log in again adds unnecessary friction to their experience. So, our advice? Hold steady for now. The potential drawbacks outweigh the benefits.
How: Develop functionalities that enable users to export their data in a user-friendly format. Implement APIs that facilitate the import and export of user data to and from other services. This not only complies with DMA regulations but also positions your app as user-centric, potentially attracting privacy-conscious consumers.
Click here to learn more about how to focus on user experience