Google, Apple and Meta face first EU Digital Markets Act investigation

European antitrust regulators said on Monday that Apple, Alphabet’s Google and Meta Platforms will be investigated for possible violations of the European Union’s new Digital Markets Law, which could result in the companies facing huge fines.

The EU law, which takes effect on March 7, aims to challenge the power of tech giants by making it easier for people to move between competing online services such as social media platforms, internet browsers and app stores. This in turn should open up competition for smaller companies.

Non-compliance can result in fines of up to 10% of a company’s global annual turnover.

U.S. antitrust regulators are also cracking down on alleged anti-competitive behavior by big tech companies that could even lead to companies being broken up.

Tech companies say they have deployed thousands of engineers to meet requirements under the Digital Markets Act that six “gatekeepers” – which provide services such as search engines and chat apps used by other businesses – for users and competitors Provide more choices.

But the European Commission said on Monday it suspected the measures taken had not effectively complied with the DMA, confirming a Reuters report.

Asked whether the European Commission was speeding up the process just two weeks after the law came into effect, EU industry chief Thierry Breton said the investigation should not come as a surprise.

“The law is the law. We can’t just sit back and wait,” he told a news conference.

Apple Compliance

The question is whether Apple complies with its obligations to allow users to easily uninstall software applications on its iOS operating system, change default settings on iOS, or access a selection screen that allows them to switch to a competing browser or search engine on their iPhone.

Another concern for regulators is “guidance”: whether Apple imposes restrictions that prevent app developers from freely informing users about offers outside of its App Store.

Apple said it was confident its plans comply with the DMA, adding that it responded to the committee and developers throughout the process and incorporated their feedback into the changes.

Regulators said the reverse steering problem also applies to Alphabet. The investigation will examine whether the company favors vertical search engines such as Google Shopping, Google Flights and Google Hotels over rivals and whether it discriminates against third-party services in Google search results.

To charge or not to charge

The committee also singled out Apple and Alphabet’s fee structures, saying they violated the DMA’s “free” requirement. Both companies recently introduced new fees for certain services.

Breton said the launch of an ad-free subscription service in Europe last November prompted criticism from rivals and users, and Meta should offer a free alternative.

A Meta spokesperson said the company is working to comply with the act’s guidance.

The spokesperson said: “Subscriptions as an alternative to advertising are a well-established business model in many industries, and we designed ad-free subscriptions to address multiple overlapping regulatory obligations, including the DMA.”

Google said it has made significant changes to its services and will defend its practices in the coming months.

The committee is also taking steps to investigate Apple’s new fee structure for alternative app stores and Amazon’s ranking practices on its marketplace.

Amazon is another DMA “gatekeeper,” along with Microsoft and TikTok’s Chinese owner ByteDance.

“Amazon complies with the Digital Markets Act and has been engaging constructively with the European Commission about our plans since the designation of both services,” an Amazon spokesperson said. “We continue to work hard every day to meet the evolving needs of Europe. high standards for all clients in a regulatory environment.”

The EU executive aims to complete the investigation within a year, the deadline set by the DMA, and said it has ordered the companies to retain certain documents so they can obtain relevant information in current and future investigations.

The EU investigation comes as criticism from app developers and business users escalates over shortcomings in the companies’ compliance efforts.

© Thomson Reuters 2024

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