Digital Markets Act Roundup: November 2024

November saw important advancements in enforcing the Digital Market Act. Booking.com became the most recently designated gatekeeper, and Apple’s iPadOS was designated as a core platform service. The new European Commissioners, responsible for overseeing tech regulation, were approved. Meta received its first antitrust fine in the EU, and Google remains in the headlines for its competition violations. Below, the roundup highlights the most important developments related to the DMA from November 2024.

Booking.com Comes Under DMA Compliance

Online travel platform Booking.com came under compliance with the DMA on November 14, 2024, marking a critical milestone for the company that was designated as a gatekeeper in May 2024. The Commission found that Booking.com serves as an important gateway for business users to reach consumers, offering a service to compare hotels, flights, and rental cars. Under the DMA, gatekeepers must comply with the act’s regulation within six months of designation implementing any changes.

One of the most scrutinized aspects of Booking’s compliance is how it addresses the ban on parity clauses. These clauses banned businesses from listing cheaper prices or better deals outside of Booking.com and allowed Booking to penalize businesses through de-ranking if they did. Article 5(3) of the DMA explicitly prohibits these practices, although monitoring the additional prohibition on “measures with the same effect as ‘parity' clauses” could be difficult. Under Recital 39 of the DMA, “measure with equivalent effect” to parity clauses can be “increased commission rates or de-listing of the offers of business users,” both of which are not acceptable under the DMA.

Related reading:

• Digital Markets Act Roundup: October 2024
• Digital Markets Act Roundup: September 2024
• Digital Markets Act Roundup: August 2024

Booking has faced a number of antitrust complaints over its parity clauses. This year, the Spanish National Commission on Markets and Competition (CNMC) issued a €413.24 million fine against Booking for abuse of dominance over its parity clauses, and back in 2015, the company faced complaints in the EU over parity clauses. In the company’s DMA compliance report published this month, Booking has committed to completely remove all parity requirements for services on Booking.com.

“Our business users (referred to as “partners”) no longer have to provide the same or better rates and conditions to Booking.com for their EEA inventory than those that they make available on any online or offline channel. We have communicated these changes to all relevant partners and we have trained our partner-facing teams to ensure they are aware of and apply the new rules. We have also looked beyond the terms of our agreements and will continue to ensure that we do not impose – and will not later introduce – any conditions to participate on our platform that effectively prevent partners from offering better prices or conditions for inventory in the EEA on other channels.”

This change extends to Booking’s partner programs, such as Genius, Preferred, and Preferred Plus, which enhance visibility to businesses in exchange for paying additional commission fees.

This commitment to the complete removal of parity was heavily debated in Booking’s compliance workshop, held on November 25. During the workshop, industry coalitions and representatives grilled Booking regarding what they consider to be a measure of equivalent effect. In response to whether ranking based on price could qualify as a measure of equivalent effect, a Booking representative stated that the ranking “algorithms do not qualify as measures having equivalent effect to parity given that we do not use external prices to increase or decrease hotel visibility. Instead, we use a variety of other input to prominently feature offers that travellers will find useful and valuable.” Though stakeholders hotly debated what practices could be counted as having equivalent effect, as pointed out by Sarah Hinck and Jasper van den Boom for SCiDA “without having access to the mechanisms of Booking’s algorithms” it is hard to know which ranking practices could fall under the provision.

While the removal of the parity clauses is positive if it allows businesses to set their own prices and avoid high commission fees, concerns persist. "Businesses, particularly small hotels, rely on Booking.com as a gateway for consumer visibility. Although they may benefit from more competitive direct bookings, as I wrote in July’s roundup, the hotel likely will not be ranked as high on Booking.com if users stop booking through the site. Booking prohibits free-riding or convincing the end user to cancel the Booking.com reservation and make it directly, but under Article 5(4) of the DMA, Booking must allow the hotel to communicate external offers. The company has allowed this to happen only after the traveler has checked into the hotel and paid Booking.com. The outcome underscores some of the challenges of regulating dominant platforms that are already deeply entrenched in their markets and where smaller participants heavily rely on them.

Ongoing Scrutiny of Google

Google Search and DMA

Following a European Court of Justice ruling dismissingGoogle’s appeal in the 2017 Google Shopping case and the Commission’s announcement in March that it was investigating Google’s compliance with Article 6(5) regarding its display of Google search results potentially self-preferencing its Google Shopping, Google Flights, and Google Hotels over rivals, Google has announced new product changes. On November 26, 2024, the company announced that due to continued dissatisfaction with changes intended to “boost the prominence of comparison sites for free in categories like flights, hotels, and shopping, among others,” the company would now introduce:

“Expanded and equally formatted units that allow users to choose between results that take them to comparison sites and results that take them directly to supplier websites when they are searching for products, restaurants, flights or hotels."

The changes also include "other new formats that allow comparison sites and suppliers to show more information about what is on their websites, like prices and pictures" and "New ad units for comparison sites.”

The company does not provide visuals of what this might look like, but the changes are designed to address concerns that Google’s search design keeps users within the Google ecosystem. The Verge helpfully provides before and after screenshots to help visualize the changes. According to Google, some stakeholders are demanding “a complete ban on anything that’s more sophisticated than a simple blue link to a website.” Google offers that new changes are needed “to understand how such changes would impact both the user experience and traffic to websites.” Therefore, “we will be running a short test to remove some hotel features from Google Search for users in Germany, Belgium, and Estonia.“ The test will remove hotel features, including interactive maps and detailed hotel results, reverting to a more traditional "ten blue links" format.

DuckDuckGo Complaint

DuckDuckGo, a privacy-focused browser engine, has published a blog post urging the Commission to “launch three non-compliance investigations around Google’s obligations” under the DMA. Those obligations include Google’s non-compliance with Article 6(11), which requires Google to share anonymized click and query data; Article 6(3), which requires Google to implement choice screens and enable end users to easily change default search settings; and Article 6(4), which requires any downloaded search or browser app to have the ability to prompt users to set search defaults easily.

DuckDuckGo argues that Google’s search data sharing eliminates around 99% of search queries due to its anonymization method, and DuckDuckGo proposes a different privacy-preserving methodology for Google to share this data. The company also argues that Google’s shared data averages ranking data, which excludes critical nuances and shares old and useless data, still is not making switching search engines easy and still hasn’t rolled out its updated Android choice screens to over 250 million EU Android users. DuckDuckGo ends the blog post with further recommendations to improve DMA enforcement, such as making gatekeepers test compliance measures with key stakeholders before publicly launching them and forcing Google to roll out an application programming interface software that would enable real-time access to its search results.

Proposed Remedies in US Antitrust Case

The US Department of Justice (DOJ) released its proposed final judgment this month in its antitrust case involving Google search, building on remedies suggested last month but with some notable updates. Though Judge Amit Mehta is not obliged to implement the DOJ’s proposals, the proposed measures include a call for the divestment of the Chrome browser and behavioral remedies for the Android operating system, with the last resort of divestiture.

It also suggests the court implement measures to prevent Google from “manipulating the development and deployment of new technologies like query-based AI solutions,” including a ban on Google owning and controlling search-related technologies, preventing exclusionary agreements with third parties such as making Google search the default on third party products, banning “competitive threats through acquisitions, minority investments, or partnerships,” and licensing its search data to competitors. Other proposed remedies include increasing transparency for advertisers into the cost and performance of Google Text Ads and banning “Google from offering anything of value for any form of default, placement, or preinstallation distribution (including choice screens) related to general search or a search access point.”

While some argue that structural remedies go too far, others argue that the proposed remedies don’t go far enough. In a similar vein, critics point out that the DMA does not impose structural remedies, only reserving them as a last resort, or does much to limit the power gatekeepers maintain over market access points. Indeed, the DMA could lead third parties to maintain dependencies on gatekeepers as the DMA seeks “to achieve competition on and around a platform by obliging,” for example, “operating systems to allow some form of competition within its platforms.” Meanwhile, the more structural remedies proposed in the Google search case are limited by the fact that they can only impose obligations and restrictions on Google and not other big tech players, argues Thomas Claburn for the Register. Moreover, some of the remedies, such as divestiture of the Chrome browser, may put many third-party dependents, including other popular browsers relying on the Chromium Project, at risk. Both regulatory frameworks reveal the extensive dependencies and control Google maintains over its ecosystem, underscoring the challenges of addressing dominance in digital markets.

Meta Facing Review and Fine

Meta's 'Pay or Okay' Spat

Meta announced changes to its non-personalized ads subscription service offered to users in the EU on November 12, 2024. Previously, Meta offered users the choice between continuing to use its services for free in exchange for consenting to data collection and showing them personalized ads or paying a subscription fee but being shown less personalized ads, presumably also collecting less data, for €9.99/month on the web or €12.99/month on iOS and Android. This was to comply with Article 5(2), as gatekeepers have to obtain users' consent for combining their personal data between their services. If a user does not consent, they must still have access “to a less personalized but equivalent alternative. Gatekeepers cannot make use of the service or certain functionalities conditional on users' consent.”

Termed “pay or okay” or “pay or consent,” the Commission notified Meta that this new advertising model does not comply with the DMA under a preliminary warning in July. The Commission took issue with the binary choice and felt it did not give the option of a less personalized but equivalent service. In response, Meta has amended the advertising model by reducing the subscription price by 40%. The company says:

“Going forward, people based in the EU will still have the option to choose between subscribing for an ad-free experience or continuing to access our services for free. For those people who choose to continue using our services for free, they’ll now also be able to choose to see less personalized ads. However, we remain committed to personalized advertising, which will always be the cornerstone of a free and inclusive internet.”

This would remove the binary choice that the Commission took issue with and theoretically bring it in line with offering a less personalized but equivalent service. For those choosing to forgo ads and pay instead, the monthly subscription is reduced from €9.99 to €5.99/month on the web or from €12.99 to €7.99/month on iOS and Android. European users of Instagram and Facebook will see a new choice screen regarding these changes.

However, for those choosing the less personalized free option, the company has announced that “we will also introduce ad breaks to allow advertisers to connect with a wider audience. This means that some of the ads people will see in the less personalized ads experience will be unskippable for a few seconds.” This could be enough for some users to switch back to a personalized ads version, which would help Meta’s argument that consumers prefer personalized ads.

The Commission will likely review these changes in its non-compliance investigation to consider whether it meets the obligations of the law or whether to pursue the findings of non-compliance, which Meta can appeal. If Meta loses the appeal, it risks fines of up to 10% of the gatekeeper's total worldwide turnover or 20% in case of repeated infringements.

Meta Fined for Abuse of Dominance

The Commission fined Meta €797.72 million for breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU), the bloc’s abuse of dominance competition law. This is Meta’s first antitrust fine in the EU. In July’s roundup, I reported that Meta was under investigation for tying its classified ads service, Facebook Marketplace, with its social network. The Commission issued a Statement of Objections to Meta in 2022 for distorting competition in the market for online classified ads and imposing unfair trading conditions on Facebook Marketplace's competitors for its own benefit. Additionally, because Meta maintains a distribution advantage over competitors, the Commission was concerned that Meta foreclosed competitors to the service.

The Commission found that Meta is dominant in the market for “personal social networks” and “online display advertising on social media.” Subsequently, Meta has abused its dominance under Article 102 TFEU by “tying its online classified ads service Facebook Marketplace to its personal social network Facebook.” The Commission found that “competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage which competitors cannot match.”

The Commission also found Meta has abused its dominance in “imposing unfair trading conditions on other online classified ads service providers who advertise on Meta's platforms” because Meta can “use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace.” Meta responded in a blog post about the company’s intention to appeal the ruling and argued that it ignores the benefit of Facebook Marketplace for consumers and names a handful of companies that operate second-hand marketplaces in the EU. It also says that they do not use advertising data from rival marketplaces that advertise on Facebook to compete against them.

New Commissioners Appointed

After weeks of political turmoil, the EU’s new College of Commissioners has been approved and took office on December 1, 2024, serving until 2029. Teresa Ribera will inherit both the competition and climate portfolios as the Executive Vice President for Clean, Just, and Competitive Transition. Henna Virkkunen will serve as the Executive Vice President for Tech Sovereignty, Security, and Democracy. Both will jointly oversee the enforcement of the DMA.

RIbera’s November 12 hearing highlighted her “unprecedented and wide-ranging mandate” to manage. She affirmed her commitment to continue the enforcement of the DMA and mentioned that she would “coordinate with other jurisdictions to effectively deal with the competitive environment in the digital markets.” In protecting consumer rights, Ribera states her intention is to “strive for stronger global cooperation among competition authorities.” This alludes to the EU-UK’s competition cooperation agreement finalized last month and could also mean similar agreements with other jurisdictions in the future, perhaps supporting the US Department of Justice’s monopoly campaigns against Google and Apple.

Addressing antitrust enforcement, Ribera referenced the possibility of structural remedies in the DMA. Under Article 18, if a gatekeeper has been issued at least three non-compliance decisions following a market investigation, the law gives the possibility for structural remedies. However, she acknowledged that beyond this tool, “we are missing a structural solution” in antitrust. As I mentioned last month, Ribera’s written responses to questions from European Parliament lawmakers mentioned the need to resolve the problem of killer acquisitions, and she again mentioned in her hearing “that we will need to think further how we can improve this solution to count on a structural response.” This could signal the new Commission’s willingness to go beyond behavioral remedies in antitrust.

Virkkunen’s hearing had less to say about the DMA beyond stating her intention to help enforce it. Rather, her hearing focused more on discussing the Digital Services Act, which she will be in charge of enforcing, as well as industrial policy. Specifically, she points out that “President von der Leyen was stating that this Commission will be an investment Commission. So we will seek all the solutions how to boost investments in this field and how to also create a framework that encourages innovation.” She makes continuous references to her priorities of “cutting our red tape” and “cutting our bureaucracy and administrative burden from our SMEs and from our industries” following recommendations from the Draghi report. Finally, investment into artificial intelligence featured prominently, continually expressing the need to build “AI factories” for Europe to become an “AI continent.”

Ribera’s appointment faced opposition due to criticism of her Spanish ministry’s management of the fatal floodings in Valencia, Spain. Opposition lawmakers threatened to veto her nomination because of the perceived failings, but the impasse was resolved on November 27, 2024, allowing the entire Commission to be approved.

Other Updates

iPadOS Regulated as a Core Platform Service

On November 4, 2024, Apple’s iPadOS, the operating system for its tablet computers, became the company’s latest product to be regulated as a core platform service under the DMA. iPadOS was designated by the Commission in April and had six months to come under compliance. Apple released its compliance report in November, which details how the operating system will comply with the law. The report largely mirrors the changes made to its iOS mobile operating system, which is also a core platform service. The report references the company’s ongoing non-compliance investigations stating that “Apple will reflect any resulting changes for iOS that stem from these investigations also for iPadOS, as applicable.”

Potential Investigation of Amazon

Foo Yun Chee reported for Reuters that Amazon “will likely” face an investigation next year into “whether it favors its own brand products on its online marketplace” under the DMA. This follows the announcement on March 25, 2024, that the Commission would be gathering information to determine whether Amazon more prominently ranks its own brand products on the Amazon Store, violating Article 6(5) of the DMA prohibiting self-preferencing. Amazon states in its compliance report that ranking “processes operate in an unbiased manner, using objective inputs and weighing them neutrally to facilitate the best possible customer choice irrespective of whether a product is offered by Amazon Retail or Sellers.”

BEUC Analysis of Gatekeeper Non-compliance

The European Consumer Organization (BEUC), a coalition of independent consumer organizations, published an analysis of gatekeeper non-compliance with the DMA. In September, BEUC published an initial review of gatekeeper changes to determine their compliance and published an update paper in November to review changes made to some core platform services.

The reports address the Commission and calls on Meta to demonstrate that it has tested its interfaces on Messenger and WhatsApp to allow “consumers to easily make genuine informed choices on interoperability” and enable design choices that do not unfairly sway user choice. In addition, the report states that Apple should provide more information on how its user journey for changing default apps complies with the DMA, provide more information on the ease of users to uninstall Apple apps and reconsider its rollout of new browser choice screens. Finally, it asks Google “to ensure that consumers have the best choices in response to their search queries in the short and the long term” by ensuring that other comparison websites not owned by Google can compete fairly in reaching end users.