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What does the Digital Markets Act mean for mobile game developers?

Source link : https://news7.asia/entertainment/what-does-the-digital-markets-act-mean-for-mobile-game-developers/

The EU’s Digital Markets Act (DMA) was passed in November 2022 and at the time was heralded as a proverbial “game patch” set to rebalance the digital playing field. But fast forward to today, with the effects of the DMA now taking shape in reality, what does this all really mean for the games and interactive entertainment industry?

A quick recap on the DMA

In a nutshell, the DMA is a new regulatory ‘level-up’ to existing competition law rules in the EU:

It’s mission? To ensure fairness online and contestability in digital markets by curbing the power of a select group of digital platforms – so called “gatekeepers.”

It’s weapon of choice? A prescriptive new rulebook targeting designated “core platform services” (CPS) (i.e. essential online services, such as mobile app stores or operating systems) of these “gatekeepers.” The rules are also backed up by hefty fining powers for failure to comply: up to 10% of a firm’s global turnover, or 20% for repeat offenders.

Who are the ‘gatekeepers’ and ‘core platform services’ in the line of fire?

Designation as a gatekeeper requires a company to have a significant impact on the EU market; provide a vital access point for businesses to reach end users, and to also enjoy an entrenched and durable position in the market.

To date, seven companies have been designated as “gatekeepers” (Google, Amazon, Apple, TikTok (ByteDance), Meta, Microsoft, and more recently Booking.com) in a total of 24 core platform services (CPSs). For the first six gatekeepers (designated in September 2023) the DMA’s prescriptive rulebook already applies (effective since March 2024), and a number of significant, high-profile policy changes have been announced by these firms as a result.

Source: European Commission website – 6 September 2023. Apple’s iPadOS operating system and Booking.com’s online holiday booking platform have also since been designated in April and May 2024, respectively.

Notably, from a video game perspective, the most immediate impact of the DMA is likely to be in mobile gaming. Designations include Apple and Google’s mobile app stores (i.e. key channels for game distribution), as well as their mobile operating systems (the playing fields which dictate the technical boundaries a game is developed and played within).

The DMA is a ‘multiplayer’ game

Although there are no gaming specific designations, make no mistake, the DMA is still a multiplayer game. The DMA will have a significant impact on those gaming industry players who are partners, customers and even competitors of these gatekeeper firms, so it’s important that all players properly understand these new rules of the game.

What opportunities does the DMA’s new rulebook provide for mobile gaming?

The DMA rulebook itself is quite dense and framed broadly to apply across various digital markets, without specific tailoring to the intricacies of the video gaming industry. In practice, the matrix of different rules for different CPSs means the impact is generally narrow, but in some cases significant. As such, we’ve pulled out those key rules that will significantly impact on video gaming and explained them here.

Linklaters’ Verity Egerton-Doyle, Tobias Rump & James Hunter | Image credit: Linklaters

The DMA rulebook brings new opportunities for distribution of mobile games

The distribution of mobile games is probably the area where DMA rules have made the most significant change. In particular:

Alternative app stores and side-loading: One of the most prominent changes brought about by the DMA is the requirement that mobile gatekeepers must allow developers to build their own alternative app marketplaces and to distribute their games via sideloading (i.e. downloading directly from a source outside of a dedicated app store) or third-party marketplaces.

For Apple, this marks a shift for its characteristically integrated mobile ecosystem. Apple is now allowing rival routes to download apps on iOS devices, challenging its proprietary App Store. The AltStore, MacPaw’s SetApp and the Epic Games Store have already released on iOS, with Microsoft’s own mobile store still in the works.

By contrast, Google’s mobile ecosystem has historically been more open as it already permitted the sideloading of games and the presence of alternative app stores (though this largely just extended to the pre-installed app store of the OEM device manufacturer, e.g. Samsung Galaxy Store). In practice, over 90% of Android app downloads are made through the Play Store (as estimated in a report by the UK competition regulator) and there are no expected changes to Google’s alternative app distribution policies on the horizon.

Both emerging and experienced industry players must adapt and level up in the face of both new obstacles and new opportunities

Fair and reasonable access to app stores: Mobile gatekeepers must now allow fair, reasonable and non-discriminatory (FRAND) general conditions of access to their app stores. This will be set out in a published document, including a dispute resolution mechanism which will be assessed by the EU.

While there are a number of potential benefits to app developers of this requirement (including, reducing potentially excessive / unfair commission rates on in-app purchases), it is particularly poignant for its potential read across that requires app store access for cloud / streamed games. Though, in reality, a watershed moment in mobile cloud gaming is yet to materialise as a result.

Greater flexibility on how game developers’ content / services can be offered and purchased

DMA rules also provide significant opportunity and flexibility in how game developer content and services can now be offered and purchased on mobile devices.

Off-platform offers and content: Mobile gatekeepers must allow developers free-of-charge to tell (or “steer”) their users in-app to offers available outside of the gatekeeper’s ecosystem (such as on the developer’s own web page) and to facilitate the completion of those transactions. Additionally, gatekeepers must allow gamers to access content, subscriptions and other services (e.g. game extension packs) purchased out-of-app, within the relevant app on their devices.

Exactly how this obligation has been implemented in practice is the subject of ongoing back and forth between the European Commission and other stakeholders.

Access to alternative payment services: Mobile gatekeepers are also banned from tying developers’ access to their app store or operating system with requirements to process in-app payments through their proprietary billing system (e.g. Apple’s IAP or Google’s Play Billing). This is a benefit to both gamers and developers who in theory are now able to make use of alternative (and potentially cheaper) billing options for in-app purchases.

Greater control / protection for mobile gamers and mobile game developers over their data

A key tenet of the DMA rules is also vested in providing greater control and protection for mobile gamers and game developers over their data. This is realised through:

Silos on game developers’ data: Gatekeepers are forbidden from using non-public information obtained from developers through the use of their CPS to compete against those mobile developers.

It was previously possible for a gatekeeper to monitor a developer’s data and use this to their own advantage; for example, by using it to optimise their own proprietary games’ content, products or features. The DMA now creates a more level playing field for app development and competition.

Data portability: Gamers are now also able to request that the gatekeeper facilitate, free of charge, the effective transfer of saved data in their games onto a different ecosystem (e.g. from iOS to Android). This not only protects a gamer’s high scores, but ensures that portability no longer acts as a preventative consideration when deciding whether to switch ecosystems. The game developer also benefits from not losing out on an end customer due to loss of data.

Both Apple and Google have introduced new functionality and APIs to facilitate gamers’ ability to port their own data, or request a third party port the data on their behalf.

Game developers should caution against over-optimism. Mobile gatekeepers still maintain the ability to reject interoperability requests

Greater developer access to user data: Gatekeepers must now provide game developers, free of charge, more useful data insights / analytics on how end users’ use their apps. This benefits game developers with vital information to enhance the user experience and produce new / improved game offerings led by user data.

To comply, Apple has introduced a new App Store Connect API with more than 50 new reports for developers to better analyse gamer’s engagement, commerce, app usage and interaction with other iOS functions. Google has similarly expanded the analytics available to developers on its Play Console with extended categories of data as well as a dedicated website to explain how developers can make best use of the new Play Console features.

The rulebook brings new opportunities for game development

The DMA rules also seek to have an impact on the early stages of a game’s development lifecycle by providing new technical opportunities for game development:

Interoperability requirement: Mobile gatekeepers are now required to provide game developers with free of charge, effective interoperability with, and access to, the same operating system, hardware or software features that are available to, or used by, that gatekeeper. This aims to ensure that mobile game developers are able to create games that can be fully integrated into the gatekeepers’ operating system; resulting in a better gaming experience for the end user and an improved offering by the developer.

Indeed, both Apple and Google have set up dedicated routes (e.g. request forms / portals) for game developers to request interoperability with hardware or software features. However, game developers should caution against over-optimism. Mobile gatekeepers still maintain the ability to reject interoperability requests if granting it would risk compromising the integrity of the OS (a common refrain that developers should prepare themselves for receiving).

Browser engine choice: Mobile gatekeepers are also now required to remove policies that force developers to only build web experiences on their devices using the gatekeeper’s proprietary browser engine. In theory, this opens up greater functionalities for developers to build web-based app games or in-app browsing experiences which are not restricted by the underlying capabilities of the gatekeeper’s proprietary web browser engine.

DMA trumps national rules – but…

The Commission designed the DMA as a one-stop-shop rule for gatekeepers. Wherever a CPS has been designated, national regulators’ enforcement in Member States is barred.

Nonetheless, some national competition authorities, such as in particular the German Federal Cartel Office (FCO), proactively seek niches to drive their own enforcement of digital platforms. In fact, Germany introduced a rule enabling the FCO to designate companies as having “paramount importance for competition across markets” already in 2021, i.e., before the introduction of the DMA. So far, Alphabet, Amazon, Apple and Meta have all been designated in this way, whereas the designation process is still ongoing for Microsoft.

The DMA rules are also vested in providing greater control and protection for mobile gamers and game developers over their data

The German framework is more flexible than the DMA and the FCO can prohibit specific behaviours to designated companies (outside of the CPS covered by the DMA). To date, the FCO ordered,among other things, Meta to enable the use of its VR-headsets by users even without an account in one of Meta’s social networks (which had effects even outside of Germany) and is investigating whether Apple’s App-Tracking-Transparency-Framework constitutes a potentially problematic form of self-preferencing (as users are only asked to confirm app tracking for third-party apps). These examples show that national enforcement can also have a relevant impact on game developers and their interaction with larger digital companies.

What about the UK?

No longer part of the EU, in May 2024 the UK Parliament passed its own platform regulation in the Digital Markets, Competition and Consumers Act (DMCCA). The DMCCA will introduce a new “Strategic Market Status Regime”, which is likely to apply to many of the same businesses.

Rather than imposing a fixed set of rules, it gives the UK’s Competition and Markets Authority power to write firm-specific Codes of Conduct, and to take potentially wide-ranging Pro-Competition Interventions. However, rules that will affect the games and interactive entertainment industry are unlikely to start applying until the second half of 2025 at earliest – depending how the CMA prioritises designations.

What’s next on the horizon?

The DMA (and comparable national rules) remains a hot topic in mobile gaming, and for good reason: these sweeping changes are aimed at putting the controller into the hands of gamers and mobile developers alike.

New payment options, third-party app distribution, and greater control / autonomy over data are all present realities, albeit the extent to which individual businesses are able to take advantage of these to their commercial benefit will differ depending on their circumstances.

While we toggle through this new normal, both emerging and experienced industry players must adapt and level up in the face of both new obstacles and new opportunities. As the dust settles, it’s still not clear who the ultimate DMA winners will be. But one thing we do know – the game is on!

Verity Egerton-Doyle, is a Linklaters partner in London and co-head of the law firm’s Games and Interactive Entertainment division. Tobias Rump, is an antitrust and foreign investment counsel in Düsseldorf, while James Hunter is an antitrust and foreign investment managing associate in London.

Source : Game Industry

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Author : News7

Publish date : 2024-09-06 14:01:00

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