"The era of 'strict regulation' has arrived! Europe is ready to 'hammer' the tech giants, with Apple and Microsoft raising the flag of resistance."

The latest blow of the EU's anti-monopoly crackdown is about to fall, and tech giants Apple and Microsoft are raising the flag of resistance.

According to the Financial Times on September 5th, Apple and Microsoft argue that some of their flagship services are not sufficient to be designated as "gatekeepers" under the new legislation proposed by the EU. These flagship services refer to Apple's iMessage chat app and Microsoft's search engine Bing.

The EU is expected to announce the first list of services to be regulated under the Digital Markets Act (DMA) on Wednesday, and Apple and Microsoft are likely to be included.

"Gatekeepers," are Bing and iMessage not qualified?

As the largest digital regulation bill in the history of Europe and the United States, the DMA officially took effect in November last year.

The DMA aims to curb the monopoly of large tech companies, defining internet giants in an absolute monopoly position as "gatekeepers," and requiring them not to abuse their market dominance to suppress or acquire competitors, not to forcefully push advertisements or install software without user consent, otherwise they will face fines of up to 10% of their turnover.

The DMA also imposes new responsibilities on these giants, including data sharing, establishing links with competitors, and making their services interoperable with competitors' applications.

According to the standards set by the DMA, only platforms with a turnover exceeding 7.5 billion euros, a market value exceeding 75 billion euros, and at least 45 million monthly active users in the EU must comply with the legislation. However, in addition to the original indicators, the EU has some discretionary power over other regulations.

According to two sources familiar with the matter, Microsoft refuses to impose obligations on Bing equivalent to those of Google Search, citing the reason that Bing's scale is far smaller than that of Google, with a market share of only 3%. Further legal scrutiny would put Bing at a greater disadvantage.

If the new rules apply to Bing, it will need to provide users with options for other search engines, including Google. Analysts are concerned that this could ultimately increase Google's market share.

However, these sources suggest that Microsoft is unlikely to object to its Windows operating system being designated as a "gatekeeper," as the operating system dominates the PC industry.

In addition, the report states that Apple believes iMessage does not meet the user threshold for applicable rules, and therefore should not be subject to obligations, including opening up the service to competitors such as Meta's WhatsApp.

Analysts estimate that iMessage, built into iPhones, iPads, and Macs, has as many as 1 billion users worldwide, but Apple has not disclosed any figures over the years. This decision may depend on how Apple and the EU define the market in which iMessage operates.

The report also states that the EU is still considering including iMessage and Bing in the final list and may launch an investigation to determine whether these services should assume the new obligations specified in the DMA. Insiders have indicated that the services of major US tech companies, including Google, Amazon, and Meta, will all be subject to regulation under the DMA. For example, Meta's Instagram and Facebook, as well as Google's search engine, are expected to be constrained by the new rules.

The enhanced DMA with new regulations will come into full effect next spring. However, before that, the European Union still needs to address the legal review of its decision by the European Court of Justice.

Andreas Schwab, the European Parliament member responsible for rule negotiations, stated:

The DMA will unleash new competition in the European digital market, and now it is up to the committee to make it effective.

Amazon and Zalando Take a Stand

It is worth noting that this is not the first time tech giants have openly resisted EU digital regulations.

German online retailer Zalando and US tech giant Amazon have taken the European Commission to court, claiming unfair attacks under the Digital Services Act (DSA).

The DSA is the EU's second piece of digital legislation aimed at establishing new standards for internet regulation and was officially implemented in mid-August this year.

The DSA requires "super-large" platforms with over 45 million monthly active users to prevent and remove harmful content and goods, allow users to disable algorithm-based personalized recommendations, and more, or else face fines of up to 6% of their global turnover.

Zalando and Amazon were included in the initial list of services under close scrutiny by the DSA, but both giants believe they should not be classified as "super-large" platforms.

The Era of Strict Regulation: How Will Global Tech Giants Respond?

While the new laws only apply to Europe, this tech regulation storm will have global implications, with companies such as Meta, Google, and Apple representing the first wave of impact.

Martin Husovec, Associate Professor of Law at the London School of Political Economy, said:

The key change is that large tech companies are losing their monopoly position in designing services and interpreting user rules.

Google, Meta, and other tech giants have all stated that they have thousands of employees working on compliance. Microsoft has already disclosed significant expenses in complying with these regulations.

According to recent reports from The Wall Street Journal, Google will introduce a choice screen for smartphone browsers, Apple will allow users to install apps from sources other than the App Store, and Meta is developing new tools to protect user privacy.

Brian Wieser, a technology industry analyst and former investment banker, said:

This is the moment for large tech companies, similar to the Glass-Steagall Act for US financial institutions, where they are transitioning from a virtually unregulated environment to strict regulation.