Microsoft (NASDAQ:MSFT) is reportedly taking steps to evade the European Union’s (EU) gatekeeper designation for its Bing search engine, which would impose new obligations and regulatory measures under the Digital Markets Act (DMA).
The DMA signifies the EU’s endeavor to exercise greater control over the activities of major technology corporations operating within the European market. The DMA outlines specific criteria for identifying gatekeeper companies, which encompass annual turnovers exceeding €7.5 billion, market capitalization surpassing €75 billion, and a minimum of 45 million active monthly users within the EU.
Gatekeepers designated under the DMA are required to share data, establish connections with competitors, and ensure their services are interoperable with rival applications. This regulatory framework is designed to foster market openness and facilitate competition, particularly from European startups.
However, concerns have arisen that these requirements could inadvertently favor Alphabet (NASDAQ:GOOGL)-owned Google. Microsoft’s Bing search engine lags significantly behind Google Search in terms of popularity, holding a mere 3% of the global search market share, as reported by StatCounter. In stark contrast, Google Search commands a substantial 91% share of the global search engine market.
Shares of Microsoft have appreciated by 37% year-to-date, although this growth falls slightly behind the 40.4% increase witnessed in the Zacks Computer and Technology sector during the same period.
Other Tech Giants Challenging EU’s New Legislation
The EU is poised to unveil its roster of gatekeepers on September 6, subjecting tech giants such as Apple (NASDAQ:AAPL), Amazon.com, Google, and Meta Platforms Inc. (NASDAQ:META) to rigorous regulations aimed at fostering competition and interoperability.
Anticipated legal challenges are expected to surface against the DMA, with technology companies potentially contesting decisions made by the European Commission within EU courts. Apple has aligned with Microsoft in defending the inclusion of its iMessage service as a gatekeeper. The tech giant may argue that iMessage falls short of the DMA’s user threshold of 45 million monthly users, potentially exempting it from certain obligations, including accommodating rival apps such as Meta’s WhatsApp.
Apple is actively exploring methods to enable third-party app stores and sideloading on its iOS platform in order to adhere to the forthcoming rules. This dispute is part of a broader trend characterized by heightened regulatory scrutiny of tech giants by European authorities. Additional legislative measures, such as the Digital Services Act, are also being developed to regulate the internet and digital services.
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