The EU launched the first-ever investigations under a massive digital law on Monday, potentially resulting in large fines for the US IT behemoths.
Amazon, TikTok owner ByteDance, and Microsoft are among six corporations recognized as market “gatekeepers” under the EU’s historic Digital Markets Act, and they have been required to comply with the new regulation since March 7.
“We are not convinced that the solutions by Alphabet, Apple, and Meta respect their obligations for a fairer and more open digital space for European citizens and businesses,” said Thierry Breton, the EU’s internal market commissioner.
In a statement announcing the probes, the European Commission, the EU’s antitrust agency, said it believed the firms’ current efforts “fall short of effective compliance.”
One of the largest tech lobbying groups, CCIA, whose members include the three giants under investigation, slammed the probes, accusing the EU of “jumping the gun” and acting too quickly.
The EU’s competition commissioner, Margrethe Vestager, said that authorities had “definitely” not hurried to investigate the corporations.
Senior officials recognize that reforms are underway, but argue that they are insufficient.
Under the new guidelines, the commission can levy fines of up to 10% of a company’s entire global revenue. This can increase to up to 20% for repeat offenders.
In exceptional cases, the EU may order the dissolution of corporations.
Unlike prior standards, which allowed probes to stretch for years, the DMA requires authorities to complete any investigation within 12 months of its inception.
Fear of restriction
The inspections on Monday are centered on whether Alphabet’s Google Play and Apple’s App Store allow app developers to show free offers to customers outside of those app marketplaces.
The commission is concerned that the two companies’ actions may not be fully compliant because they impose “various restrictions and limitations”.
Alphabet is also being questioned over whether Google search results benefit its own services, such as Google Shopping or Google Flights, over competitors.
In 2017, the EU fined Google a stunning 2.4 billion euros ($2.6 billion) for identical charges of self-preferencing.
Oliver Bethell, Google’s head of competition, stated that Google had made “significant changes to the way our services operate in Europe” and that “we will continue to defend our approach in the coming months.”
Apple said it was “confident” that their proposal complies with the DMA.
Concerns about consent
Apple is also being questioned over whether it allows users to quickly uninstall apps from its iOS operating system, as well as the design of the web browser selection screen.
The DMA requires gatekeepers to provide choice panels for online browsers and search engines to ensure users have more options.
Meta also faces issues with its ad-free membership strategy, which has already received three complaints since its inception in November.
European consumers can pay to prevent being tracked for advertising purposes, but officials were not convinced.
“We have serious doubts that this consent is really free when you are confronted with a binary choice,” Breton said in a press conference.
Meta has encountered a slew of legal issues in the EU for its data processing, including a 1.2 billion-euro fine last year for data privacy violations.
Meta defended their scheme. “We designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA,” stated a spokeswoman for the company.
Turning sour towards Apple
In addition, EU authorities will investigate whether Amazon favours its own brand products on the Amazon Store and whether Apple’s new charge structure for other app stores “may be defeating the purpose” of its DMA responsibilities.
Amazon’s spokesman stated that it was “compliant” with the DMA.
Apple faces a slew of legal challenges on both sides of the Atlantic, and Monday’s statement adds to the company’s problems.
The US Department of Justice sued Apple last week, accusing the company of monopolizing the smartphone market.
That came just weeks after the EU fined the iPhone maker 1.8 billion euros for barring consumers from getting cheaper music streaming subscriptions.
Apple announced that it would fight the EU penalties.
AFP