EU Launches First Probes under Digital Markets Act, Targeting Apple, Google, and Meta
European antitrust regulators have announced the initiation of investigations into tech giants Apple, Alphabet (Google's parent company), and Meta Platforms for potential violations of the EU's Digital Markets Act. This move could potentially lead to substantial fines for the companies involved.
Enacted on March 7, the Digital Markets Act seeks to challenge the dominance of major tech companies by facilitating easier transitions between competing online services, such as social media platforms, web browsers, and app stores. The overarching goal is to create more opportunities for smaller companies to compete in the market.
Breaches of the Digital Markets Act could result in fines of up to 10% of the companies' global annual turnover. Simultaneously, U.S. antitrust regulators are also intensifying scrutiny of Big Tech, exploring alleged anti-competitive practices that might even culminate in the breakup of these companies.
Tech firms assert that they have mobilized extensive resources, including thousands of engineers, to meet the Digital Markets Act's requirements. These requirements include ensuring that six designated "gatekeepers," which provide services like search engines and messaging apps utilized by other businesses, offer users and competitors increased options. However, the European Commission expressed doubts on Monday, suspecting that the companies' efforts may fall short of effective compliance under the DMA.
Responding to questions about the swift initiation of investigations just two weeks after the act came into effect, EU industry chief Thierry Breton emphasized that adherence to the law cannot wait, stating, "The law is the law. We can't just sit around and wait."
Key areas of concern for regulators include Apple's compliance with obligations to facilitate easy uninstallation of software applications on its iOS operating system, allowing users to alter default settings, and providing access to choice screens enabling the switch to rival browsers or search engines on iPhones. Additionally, regulators are scrutinizing whether Apple limits app developers' ability to inform users about external offers outside of its App Store without charge.
Alphabet, too, faces scrutiny regarding potential favoritism towards its vertical search engines, such as Google Shopping, Google Flights, and Google Hotels, over competitors. Regulators are also examining whether Alphabet discriminates against third-party services in Google search results.
Further investigation will delve into Apple and Alphabet's fee structures, which allegedly contradict the Digital Markets Act's requirement of "free of charge" services. Both companies have recently introduced new fees for certain services, drawing the attention of regulators.
In response to these developments, Meta, which introduced a subscription-based ad-free service in Europe last November, is urged to provide free alternative options in compliance with the act's guidelines. Google has defended its approach, stating it has made significant changes to its services.
The European Commission is also investigating Apple's new fee structure for alternative app stores and Amazon's ranking practices on its marketplace. Amazon, designated as a DMA "gatekeeper," alongside Microsoft and ByteDance (owner of TikTok), asserts its compliance with the act and expresses commitment to meeting evolving regulatory standards.
The EU executive aims to conclude the investigations within a year, as stipulated by the Digital Markets Act. Meanwhile, criticisms from app developers and business users regarding perceived shortcomings in the companies' compliance efforts continue to escalate.