The European Union (EU) has initiated investigations into three major tech companies: Apple, Alphabet, and Meta, utilising a new piece of legislation aimed at limiting the market dominance of large technology firms. The EU’s administrative body, the European Commission, revealed on Monday that official investigations were underway to ascertain if Apple and Alphabet, the parent company of Google, were giving undue preference to their own app stores, along with questioning the use of personal data for advertising by Meta, Facebook’s parent company. Together, these three firms employ over 12,000 individuals in the Republic.
The investigations are being conducted under the Digital Markets Act (DMA), a law established to counteract the dominance of premier online platforms, referred to as digital ‘gatekeepers’. This recently enacted law has the potential to levy substantial fines on companies, amounting to as much as 10% of their worldwide revenue, if they are found to be non-compliant.
“These are not trivial offences,” remarked Margrethe Vestager, the EU’s executive vice-president responsible for digital policy. She added that the DMA is aimed at providing more choices to consumers, and that these cases exemplify the intended output of the DMA.
The law obligates companies to allow app developers to direct consumers to products outside their platforms without charging them for this service. The legislation also mandates that platforms which offer ranked search results must display third-party services in a just and impartial manner.
The European Commission has expressed concern that Apple and Alphabet may have placed ‘boundaries and restrictions’ that limit developers’ abilities to promote alternative services. On this note, they are also scrutinising services such as Google Shopping and Google Flights to determine if Alphabet is prioritising these in their search results. The commission is also examining whether Apple is fulfilling its obligations to allow for easy uninstallation of software applications on their iOS platforms and permitting changes to default settings, browsers, and search engines.
Additionally, Meta is facing scrutiny over their new subscription model, which requires payment or consent. The commission is investigating whether this model adheres to the DMA’s mandate for gatekeepers to secure user consent to “combine or cross-utilise their personal data” for advertising purposes.
Thierry Breton, the EU’s Internal Market Commissioner, has expressed doubts about the measures Alphabet, Apple and Meta have undertaken to comply with the Digital Markets Act (DMA), insinuating that the steps may not fully respect the stipulations for a more equitable and transparent digital field for European citizens and companies.
The DMA has formed a framework of rules with the aim of pressuring Big Tech firms to adjust their operations, enabling a more competitive digital market space. These actions follow closely on the heels of a €1.8 billion penalty that the EU imposed last month on companies hindering music streaming applications like Spotify from sharing information about less expensive options with users. Last week, the US Department of Justice sued Apple for reportedly wielding its smartphone sector influence to stifle competition.
Alphabet and Meta have frequently found themselves on the regulatory radar of the EU and other key players. Brussels anticipates wrapping up its investigations within a year, hastening the historically lengthy process associated with antitrust inquiries.
On the other side, tech giants rejected notions of misconduct on Monday. Apple expressed assurance that it aligns with DMA principles, pledging to continue constructive dialogue with the European Commission throughout the investigations. Similarly, Amazon said it complied with the regulations and had been in ongoing constructive discussions with the European Commission since two of its services had been designated.
Likewise, Meta commented, “Subscriptions as an alternative to advertising are a well-established business model across many industries… We will continue to engage constructively with the Commission.”
Google’s Director of Competition, Oliver Bethell, stated that significant alterations had been made to the way their European services function in adherence to the Digital Markets Act, and they would continue to advocate for their stance in the forthcoming months.
Critiquing the timing of these announcements, Daniel Friedlaender, Senior VP and head of CCIA Europe (a tech lobbying group), said, “While the DMA compliance workshops are still in progress, the Commission appearing to jump the gun may confirm industry apprehensions of the DMA compliance procedure becoming politicised.” – Copyright The Financial Times Limited 2024