What is the Digital Markets Act (DMA)?

The Digital Markets Act, or DMA, is a groundbreaking piece of antitrust legislation in the European Union that’s meant to check the power of a set of large digital platforms - including Apple, Google, Microsoft, and Meta - with the intention of creating a more open and competitive economy. It is one of the most important pieces of antitrust regulations targeting tech companies that’s ever been passed in the EU, and is representative of the larger global phenomenon of anti-competitive legislation and lawsuits getting passed worldwide.

Timeline of the EU Digital Markets Act

The Digital Markets Act was first passed on November 1, 2022 - then on September 6, 2023, the EU Commission designated an initial 6 gatekeepers:

1. Apple
2. Alphabet
3. ByteDance
4. Amazon
5. Meta
6. Microsoft

These gatekeepers had until March 7, 2024 to comply with the provisions of the DMA or face major penalties (up to 10% of a company’s global revenue).

Apple and Google then each responded with their own updated policies to address the DMA for gaming apps. We’ll dive into deeper detail on each of these in later sections, but to summarize:

• January 25th: Apple introduces alternative terms that developers distributing their games can opt into - it would allow them to link out to third-party payment gateways and web shops, and distribute outside of the App Store. But this comes with fees of up to 17% on IAPs, a 3% payment processing fee, and a new, core technology fee (€0.50 for each install 1 million 
• March 4th: The EU Commission hits Apple with a €1.8 billion fine for abusing its power and “preventing them [developers] from informing iOS users about alternative and cheaper music subscription services available outside of the app”
• March 5th: Google launches its DMA compliance measures, including letting users opt into alternative billing (26% IAP commission fee), or letting developers offer only a third-party payment system (27% IAP fee). They also introduced an external offers program so developers can promote and direct users to external links directly from in-app - and this comes with fees of up to 10% on IAPs for 2 years
• August 8th: Apple amends their EU App Store policies to expand the freedoms of developers to communicate and promote alternative payments. This comes with two new fees: an initial acquisition fee of 5%, and a store services fee (10% for developers that opt into Apple’s alternative terms and 20% for those that don’t) 

After enforcement began on March 7, the EU Commission filed its first investigation on March 25th under the Digital Markets Act - they began looking into Apple, Google, and Meta.

Gatekeeper do’s and dont’s

Under the Digital Markets Act, companies defined as gatekeepers are subjected to stricter compliance and can face huge fines if they fail to meet the law’s requirements. So what features should a gatekeeper be offering?

• Data transparency: Businesses that use the gatekeeper’s platform must be able to access the data they generate while using the platform 
• Advertising tools: If companies are advertising on the platform, the gatekeeper must provide them with the tools and information they need to verify if their ads are reaching the right people and getting results
• Direct-to-consumer capabilities: Gatekeepers have to allow businesses to promote their products and sell directly to customers, outside of the platform

And what can’t gatekeepers do under DMA gaming provisions?

• No self-preference: Gatekeepers aren’t allowed to give their own products or services a higher ranking or better visibility than similar ones offered by other companies on their platform
• Don’t block off-platform connections: A gatekeeper can’t stop consumers from connecting, interacting, or doing business with businesses outside of their platform 
• No sneaky ad tracking: Without users’ explicit permission, gatekeepers can’t track what they do outside of their main platform for targeted advertising purposes

DMA in gaming: impact on developers

The Digital Market Act’s new rules and restrictions against gatekeepers open up opportunities for game developers to reach customers directly, get greater access to data, and enjoy a more fair and competitive market.

Let’s take a look at a few of these advantages according to each gatekeeper restriction*:

*Note: these are all advantages that should happen in a perfect world if gatekeepers complied fully with what the EU Digital Markets Act set forth. As we’re about to get into, platforms like Apple are still charging fees for linking out and microtransactions made from third-party channels.

Apple’s response to the Digital Markets Act

As we mentioned above, Apple pushed policy updates and received penalty threats since the EU Digital Markets Act was announced. 

First, on January 25, 2024, Apple announced its first response to the Digital Markets Act. This included alternative options for distributing apps and payment processing. Specifically, they provided new APIs and tools for developers to distribute their iOS apps on alternative app stores, established a framework for developers that want to create a third-party app marketplace, and created options for using alternative payment providers and processing payments through link-outs.

For developers to take advantage of these new capabilities, Apple maintained they’d need to opt into Apple’s alternative terms, which they rolled out alongside the updates. These terms carried changes to existing fees and new ones, including:

• Reduced IAP commission: 10-17% commission fee (compared to 27% for the standard terms)
• Payment processing fee: 3%
• Core technology fee: €0.50 for each install within a year after exceed 1 million installs

Many developers felt Apple was still failing to comply with the impending Digital Markets Act rules, and their response was swift and harsh. David Heinemeier Hansson, CTO of 37signals and creator of Ruby on Rails, said in a blog post immediately following Apple’s announcement:

“This poison pill is therefore explicitly designed to ensure that no second-party app store ever takes off…All of the EU’s efforts to create competition in the digital markets will be for nothing.” - David Heinemeier Hansson

And Tim Sweeney, CEO of Epic Games (and notorious critic of Apple thanks to the Epic v Apple dispute), wrote on X that Apple’s policies were “hot garbage” and “devious”.

Nikita Bier, investor and Founder of Gas (acquired by Discord), did the math on his X account using Apple’s new fee calculator to demonstrate how Apple’s fees ad up for larger apps:

The EU Commission found fault in Apple’s policy updates, too: they went ahead and launched an investigation into the platform on March 25, 2024. And on June 24th, they made a preliminary ruling that Apple was indeed in violation of the Digital Markets Act.

“Under the DMA, developers distributing their apps via Apple's App Store should be able, free of charge, to inform their customers of alternative cheaper purchasing possibilities, steer them to those offers and allow them to make purchases. The Commission preliminarily finds that none of these [Apple’s] business terms allow developers to freely steer their customers.”

So, Apple updated their policies yet again to comply with the Digital Markets Act.

On August 8, 2024, Apple announced updates to their EU App Store terms, including the linking out policy, third-party app distribution, and payment processing in the EU. In another step towards complying with the Digital Markets Act, Apple removed many of the restrictions it had initially placed on developers regarding link-outs and promotion and communication of alternative payment options - including letting devs opt out of Apple’s alternative terms while maintaining the ability to link out. A few of these new freedoms include:

• Providing detailed instructions and info about offers, including prices 
• Designing a link in-app that can be tapped, scanned or clicked
• Using an unlimited number of URLs
• Linking to landing pages using redirects and added parameters

And alongside these changes, Apple introduced two new fees:

1. An initial acquisition fee of 5% on all new installs for the first 12 months
2. A store services fee of 10-20% 

All developers must pay the acquisition fee, but the amount you’re charged for the store services fee depends on whether you opt into their alternative terms or not:

If you opt in: You’re charged the acquisition fee (5%) and a 10% store services fee. But you’re also still subject to the core technology fee (€0.50 for each install within a year after you exceed 1 million installs). That’s a total of at least 15% in service fees - not including the charges accrued by the CTF.

If you don’t opt in: The acquisition fee still remains (5%), and you’re charged a 20% store services fee. There’s no core technology fee, however - so you’re looking at a 25% commission fee.

There’s some serious math that needs to be worked out here to determine which is the better option for studios, and this opaqueness has once again stirred the developer community:

“We are currently assessing Apple’s deliberately confusing proposal. Apple once again blatantly disregards the fundamental requirements of the Digital Markets Act (DMA).” - Jeanne Moran, Spotify spokesperson 

As the EU Commission’s investigation continues, it will either lead to more changes from Apple - and perhaps a hefty fine of up to 10% of its $383 billion in global annual revenue - or acceptance that they’ve complied with the Digital Markets Act. If more changes come down the pipeline, they’ll likely continue building upon what Apple’s already done to give developers more freedom to link out, offer and promote third-party payments, and distribute their apps on alternative platforms.

Google and the Digital Markets Act

Whereas Apple has introduced a couple of rounds of updates to comply with the EU Digital Markets Act, Google rolled out the one and only set of policy changes on March 5, 2024:

• Changes to Search results: Google made more than 20 changes, like adding dedicated units to results pages that show comparisons between sites
• Sideloading: Google already offered access to third-party app stores on Android - they reaffirmed this and added that Android 14 included updates to make sideloading even smoother and easier for users
• Two billing frameworks: Google rolled out the following alternative billing guidelines in 2022, then expanded developer-choice billing to include game developers the week that the Digital Markets Act compliance measures were adopted 
  • User choice billing (UCB): Game developers can offer an alternative billing option to users - meaning the user is presented both options and chooses whether to use it or stick to Google Play’s payment processing. If they choose the alternative option, the standard service fee is reduced by 4% (standard service fee is 15% if revenues are less than $1 million each year. It’s 30% on revenues once exceed $1 million, or 30% if not enrolled in or eligible to join the 15% program)
  • Developer choice billing: Game developers can offer only an alternative payment option to players. Opting for this framework reduces the standard service fee by 3%
• External offers program: Along with the two billing options mentioned above, Google also unveiled a new program allowing developers to promote and direct users to external channels, like web shops. The program came with two additional fees (you may notice some similarities with Apple’s framework):some text
  • Initial acquisition fee: 10% for IAPs (5% for auto-renewing subscriptions) for the first 2 years
  • Ongoing service fee: 17% for IAPs (7% for auto-renewing subscriptions)

To summarize: If you operate under Google’s user choice or developer choice billing frameworks, you’re subjected to up to a 26% fee (UCB) or 27% fee (developer choice). But then you can’t take advantage of linking out. If you enroll in the external offers program, you’re going to pay those two fees, totalling up to 27%. You can still use Google’s billing options while enrolled in external offers, though - then the fees will depend on whether the user completes the purchase in-app or externally.

The response to Google’s updates were about as negative as to Apple’s. And while there was plenty of criticism about the policies failing to comply with the DMA in gaming (Tim Sweeney - whose company, Epic Games, is also embroiled in an ongoing lawsuit with Google - said on X, “Congratulations to Google, fast-following Apple to introduce fake open billing in Europe”), it was web-based companies like Yelp, Booking.com, and AirBnB that rose up and spoke out.

Their biggest critique was with the Search results changes and how they still gave Google priority over competitors. In an open letter to the EU Commission, the EU Travel Tech association claimed “Google continues to self-preference its own intermediation services on the Search Engine Results Page (SERP).”

Yelp also published their own response with a similar complaint: 

“Yelp’s analysis found that Google’s new European SERPs actually appear to exacerbate the search giant’s self-preferencing, leading it to keep even more traffic within its own properties than in Google’s pre-DMA SERPs.”

Just like Apple, Google is under investigation by the EU Commission to determine if its latest updates are suitable under the Digital Markets Act. And also like Apple, if more changes are required, it’s likely that Google will loosen its restrictions and try to address its dominance in the market even further. For game developers, this could look like reduced fees and more opportunities to reach players directly, promoting external offers and sending them to third-party channels.

Start reaching players directly

As the EU Commission continues enforcing the Digital Markets Act, all signs point to the gatekeepers opening up their platforms to allow developers to create direct relationships with players. But keeping up with the latest DMA gaming updates and other policy changes can be complicated and time-consuming. If you want help understanding these policies and their implications for gaming and your business, reach out  to us at Stash - we’re here to walk through them together.