Video games and the Digital Markets Act

The EU Digital Markets Act is a dramatic change to online business. It’s also a lot of text. So understanding exactly what it means for the video game industry is a tricky exercise without a walkthrough or a fan-hosted wiki. Let’s try to change that, and explore how video games and the Digital Markets Act overlap.

What is the connection between video games and the Digital Markets Act

First, a bit of background on what the Digital Markets Act is trying to do.

There are some roleplayers in the video games industry that have so much power that they can control a lot about how the industry does business. This includes powerhouses like Apple and Alphabet controlling distribution through the App Store, Google Play or their respective operating systems; or like Alphabet and Meta controlling marketing through Facebook, Youtube or their digital advertising services. These players act as gatekeepers to video games and the Digital Markets Act seeks to loosen their grip on the industry.

How it does that is by identifying those powerful organisations, and requiring them to follow certain rules laid out in the Act.

A practical analogy: the App Store

I’m a big believer in learning through analogy, so let’s use some example scenarios to look at the connection between video games and the Digital Markets Act.

We’ve spoken before about what the Digital Markets Act does, but as a quick Last Time on Dragonball Z recap, the Act:

• designates certain companies as gatekeepers if they have a big enough:
  • reach (over 45 million users/month and 10,000 business users/year); and
  • turnover or market value (over EUR 7.5 billion or EUR 75 billion, respectively); and
• requires them to do or not do certain things regarding the core services they provide (like intermediation services, video-sharing platforms, or operating systems).

Most gamers would likely jump to Steam as an example of a gatekeeper – it is after all one of the most clearly recognisable faces of gaming. But despite its incredible reach, Steam hasn’t actually cracked the thresholds required to be a “gatekeeper” under the Digital Markets Act.

Instead, let’s build our analogy using Apple as our (real-world) gatekeeper, and the App Store as one of their core services. What kind of things does the Digital Markets Act require Apple to do or not do, and what practical effect does that have on game companies? I’ll focus on only a few of those parts of the Act that most affect the video games industry.

Apple’s Do’s

Under the Digital Markets Act, a gatekeeper must:

• allow a business to advertise and sell its services to users acquired through the gatekeeper’s services, even if the sale doesn’t happen through the gatekeeper’s services (Art 5.4).
  • For example: If a player gets your game from the App Store, you can advertise your other games to them and have them buy those games from you via Steam or your own website.
• allow users access to services they bought from somewhere else (Art 5.5).
  • For example: If a player gets your game from somewhere other than the App Store, they can still use it on their iPhone.
  • Note: Be careful not to confuse this with allowing a player to use games made for iOS on an Android device. Games made for iOS are still a distinct product. The Act simply allows you to sell your iOS game somewhere else, like your own website or possibly even the Play Store. Theoretically (if Valve allowed it) this would let you establish your Steam page as your complete sales hub, where you could buy the PC, iOS and Android versions of the game all together.
• provide businesses with daily advertising information like costs, proceeds and metrics (Art 5.9/5.10).
  • For example: If you advertise your game on the App Store, Apple must give you a breakdown of the daily costs of their advertising services, including deductions, as well as how those costs are calculated.
• allow users to install and use any other third party software store, even if not acquired through the gatekeeper’s own services (Art 6.4).
  • For example: If a player owns an iPhone but doesn’t want to buy games via the App Store, Apple must allow the player to install and use games or platforms from other providers, like the Play Store or Steam. Of course, this would require that Google has built an iOS version of the Play Store, and is selling iOS games on it.

Apple’s Don’ts

Under the Digital Markets Act, a gatekeeper must not:

• automatically advertise with data from users of third party services (Art 5.2(a)).
  • For example: If a player downloads your game from the App Store, the App Store can’t process that player’s personal information to use for the App Store’s advertising, unless that player has specifically consented to it.
  • Note: This means Apple can’t use data about things that happen inside the relationship between you and your player, like what the player did in your game, or how long they spent playing it. But Apple can still use data about things that happen outside of the relationship between you and your player, like general App Store user data or what games they’ve looked at or downloaded.
• prevent a business from offering the same services to users in different places or on different terms (Art 5.3).
  • For example: If you sell your game on the App Store, you can still sell it on Steam or on your own website at a different price. This means that Apple can’t force you to give its users the best rate if you don’t want to – you can run a sale on your website without it affecting your App Store price.
• force a user or a business to use any specific payment services or payment support services provided by the gatekeeper (Art 5.7).
  • For example: If a player buys a game on the App Store or makes an in-app purchase on an iOS game, you can use any payment method or support systems you choose to conclude that transaction, like Paypal or Stripe, and not just Apple’s services.

Conclusion

Together these obligations can make a hefty crack in some gatekeepers’ private walls around the industry. Of course, some others won’t be as heavily affected. Alphabet, for example, allows users to download and run apps on Android devices, even if those apps were not bought on the Google Play store – and has done so for a long time. Apple, on the other hand, has not.

We’ve already started seeing a few fights break out around the Act, and some gatekeepers’ responses to it. Epic Games recently took a shot at Apple for implementing changes that effectively ignore the Digital Markets Act’s requirements, and Apple retaliated by closing down Epic’s newly-opened developer account (later reinstated after backlash).

In time, we will see whether these obligations lead to more practical benefits to the business of video games and the Digital Markets Act’s success.

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