Home / News / The DMA Breakdown: What does the Digital Markets Act mean for your business? | Pocket Gamer.biz

The DMA Breakdown: What does the Digital Markets Act mean for your business? | Pocket Gamer.biz

43
The DMA Breakdown: What does the Digital Markets Act mean for your business? | Pocket Gamer.biz

Last week PocketGamer.biz’s head of content Craig Chapple, Archie Stonehill, head of product at Stash, Ryan Davis, head of performance marketing at Kwalee, and Igor Melniks, SVP business development at ZBD took part in a live webinar hosted by Raptor PR’s associate director, Clare Wimalasundera.

The discussion took in the full gamut of the EU’s Digital Markets Act, the new legislation with broad powers to open up platforms and keep powerful gatekeepers such as Apple and Google in check.

With a breakdown of what the DMA is, and potentially what it could mean for anyone releasing an app in the EU in the coming months and years at its core, the talk tackled all things DMA and shed light on some interesting aspects of the law that are yet to make themselves noticed.

What is the DMA and what does it mean for you?

Rather than the government needing to prove that a law is being broken, here the gatekeepers need to prove that they’re doing everything right. That’s a huge difference to how traditional law works.”

Archie Stonehill, Stash

In brief, the DMA is a set of trading regulations that were passed by the European Union almost two years ago with its enforcement beginning March 6th 2024.

It’s worth noting that the act was passed at EU level – similar to GDPR – and is therefore enforced at the EU wide level. As such it comes with strong intervention and punitive measures in order to make the big platform holders sit up and take notice. And with the EU able to fine up to 20% of a giant corporation’s global takings as fines, it’s got the barbs to get the job done.

Archie Stonehill, head of product at Stash provided the background on why the act had to come into place. “Simply put, pro competitive measures in other fields have traditionally failed the digital landscape,” he explained. “You had to prove that customer harm had happened which can be hard on the case of Apple and Google as they’re able to cite the services that they’re providing. But with acts such as the DMA, the onus is on the governed businesses to prove that they’re not breaking the rules. So rather than the government needing to prove that a law is being broken, here the gatekeepers need to prove that they’re doing everything right. That’s a huge difference to how traditional law works.”

And as Apple and Google are designated gatekeepers in multiple ways, they need to prove that they’re in compliance in each place they have products, be it platform holder or app store operator.

That means that in each place they can’t favour their own products or commit abusive behaviors that make fair competition impossible. In short, they can’t favour their own distribution channels or stores and payment services.

Which breaks down into three key ways that app stores are opening up:

1) In native in-app payments

If you distribute an app through an app store what payment providers can you use to do that? Can you opt to use another processor other than the app store operator? The answer is yes, but – right now – this is where the gatekeepers are the most sticky and unhelpful. “It’s highly unlikely that we’ll have freedom here any time soon,” says Stonehill.

2) In how you can distribute your app

Now you can distribute your app outside that platform’s ‘App Store’ – but in reality, that process is much harder. Apple has been made to allow alternative app stores – or through a webpage.
There will be movement in this regard, but it will go on being contested.

3) Where you can pay for goods and services

Now you can pay for things outside the app environment. The main proponents of this feature are, of course, webstores, where in-game items are for sale outside of the app that uses them. This is where you’ll see the most and easy to comprehend movement and apps/services such as Spotify are already using it.

Apple’s response so far…

The way Apple has responded to the rollout of the DMA – forcing it to ‘open its doors’ to new ways of getting apps and services onto iOS in Europe – was to issue an alternative set of terms.

The choice for developers and publishers in Europe became ‘simple’. Either stick to the existing terms of service, or go for their new, alternative set of rules but be aware that rather than simply paying a 30% cut of fees you would instead by paying a reduced commission on any sales of ‘just’ 20% but would incur a new 50 cent per install fee as the Apple Core Technology Fee.

It’s the introduction of this ‘per install’ element that many developers and publishers are finding problematic. There are instances – of course – where if an app is making enough money, a mere 50c per user for the install is a drop in the ocean and a ‘reduction’ to 20% fees will be seen as a welcome gift. “There is a viable economic benefit to be had even on these terms – which are as bad as they’re going to get,” observes Stonehill.

However there are many other apps where the prospect of paying Apple 50c just for the app to be installed is prohibitively expensive. And the decision as to which agreement to sign is firmly in the developer/publishers realm with a wrong choice potentially costing them dearly. It’s therefore going to prove hard for publishers to make a choice from an accounting level. And with different games following different monetisation models, it’s hard to choose a path.

Apple’s response is the perfect inverse to their longstanding App Store offer. Now you can simply pay 30% and forget about or – you asked for it and you got it – here’s an option with multiple complications built in…

This situation – that of which deal to sign – seems set to continue and while it’s likely that these ‘alternative’ terms will change and perhaps become more favourable, the notion of making a choice that isn’t going to suit every one of your titles isn’t going to go away.

“There’s a lot of difficult decisions coming together to make it harder to make mobile games,” surmises Stonewall.

And the good news?

These policies were quite clearly architected to be as far as they dared push it. But Apple even allowing you to download outside the app store? That’s pretty amazing.

Archie Stonehill, Stash

“These policies were quite clearly architected to be as far as they dared push it. Previously you couldn’t even opt out! Now you can opt out one time,” Stonewall explains. “But Apple even allowing you to download outside the app store? That’s pretty amazing.”

Plus, following behind the scenes DMA pressure, it seems, Apple have been forced to make some changes to their regulations already.

Apple now allows emulators on store (retro games and the like) where previously they had a blanket ban to avoid any copyright infringement, upset and subsequent claims against them. Likewise they limited an app’s draw and ‘power’ by preventing the provision of stores within stores… Hence there being no western equivalent of the WeChat or Alipay giants which rule in Asia.

However the principle changes they’ve made are in alignment with the required anti steering measures. That is, control over the paying for goods and services and where can you pay. Now Apple must allow payments outside of an app and can’t steer where to pay.

Heavy scrutiny with Apple’s out of app distribution is now afoot. Previously side-loading was only possible with an approved app store and devs were not allowed to distribute from the browser. So we’re already seeing changes and – according to the panel – we can expect to see more with more favourable terms perhaps being around the corner.

Igor Melniks, SVP business development at ZBD describes the sentiment to the DMA thus far and what could happen next. “Sentiment about DMA is very good and its heading in the right direction,” he explained. “But we need a level playing ground so we can have new solutions and choice… But Apple are making it super confusing by design.

“Going from 30 to 27% for payments outside the store means that you pay more in fees for the third party providers. If you have a large portfolio of games and you switch then you could end up paying for those installs.
Having to cross that line and make that decision is hard. Spotify perhaps summed it up best when they said that the way that Apple are implementing these terms basically amounts to extortion.”

Things can only get better?

I think it’s going to turn around quickly in the next year and the terms will be completely different to what they are now. People hope that it’s some kind of silver bullet – but it’s going to take longer to get there.

Igor Melniks, ZBD

Overall, however, the introduction of the DMA was viewed by the panel as a very positive change.

“I think it’s going to turn around quickly in the next year and the terms will be completely different to what they are now. This is a first step in the right direction,” said Melniks. “People hope that it’s some kind of silver bullet – but it’s going to take longer to get there.”

And its in the field of webstores where the DMA has had the most pronounced change for good. “You can sell your items with whoever you want. Sure Apple want to create a good degree of confusion but if you dig into it there are good opportunities,” says Stonehill.

“Playtika are doing 30% of their business on web stores and taking 200m dollars and paying 2 to 3% in fees. It may all seems overwhelming and different right now, but the case studies are there for companies who are savvily navigating these changes.”

And best of all the panel feel that the DMA has the power to get the job done. “Apple can’t pull its phones out of Europe – that was an option in individual countires – and the EU will decide if Apple and Google are complying within a year,” said Stonehill. “And I expert there being some correction settlement before then. Microsoft chose to break up their company rather than flipping their coin [in their American anti-trust case]. I think we could see something similar with Apple. I think this could be the saviour of our industry – if you go from average 30% to 10%?

“There are whole genres and models that don’t work right now at 30% but would work with an extra 20%.”

 

Comments