EU probes Apple, Google, Meta under new digital law
5 Min Read
After being designated as "gatekeepers", the largest digital firms including Amazon, TikTok owner ByteDance, and Microsoft, have had to to comply with the EU's groundbreaking DMA since March 7.
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European Commissioner for A Europe Fit for the Digital Age and Competition Margrethe Vestager speaks during a media conference regarding an antitrust case against Google Adtech at EU headquarters in Brussels, Wednesday, June 14, 2023. (AP)
The EU launched on Monday the first probes under a massive digital regulation, potentially resulting in large fines for the US IT behemoths Apple, Google parent Alphabet, and Meta.
The European Commission, the EU's antitrust authority, stated that it "suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA"—the bloc's Digital Markets Act.
After being designated as "gatekeepers," the largest digital firms including Amazon, TikTok owner ByteDance, and Microsoft, have had to to comply with the EU's groundbreaking DMA since March 7.
The DMA wants to build a more equitable digital landscape by limiting how the largest corporations behave online, including ensuring people have more options.
Some senior authorities have admitted that adjustments by some companies have not been enough.
Thierry Breton, the EU's internal market commissioner, said the solutions may not "respect their obligations for a fairer and more open digital space for European citizens and businesses."
The commission can levy fines of up to 10% of a company's entire global revenue, increasing up to 20% for repeat occurrences.
The EU has the authority to dissolve enterprises and the DMA requires regulators to act within 12 months of any investigation.
The inspections on Monday are centered on whether Alphabet's Google Play and Apple's App Store enable app developers to display free offers to customers outside of those app marketplaces.
Google favoring its own services over competitors
"The commission is concerned that Alphabet's and Apple's measures may not be fully compliant as they impose various restrictions and limitations," it said in a statement.
Alphabet is also being questioned about whether Google search results choose its services over competitors.
Read more: Google to pay €250m in France for not paying agencies for content use
Apple is also being questioned over whether it allows users to quickly remove apps from its iOS operating system, as well as the design of the web browser selection screen.
The DMA requires "gatekeepers" to provide choice screens for online browsers and search engines to level the playing field and provide users with additional alternatives.
Meta faces further challenges with its ad-free membership plan, which has already received three complaints since its inception in November.
The European Commission is concerned that a "binary choice" offered to users in the EU "may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers."
Meta has encountered a slew of legal issues in the EU for its data processing, including a 1.2 billion euro punishment last year for data privacy violations.
Numerous challenges for Apple
In a second action, authorities will investigate whether Amazon favors its own-brand items on the Amazon Store and if Apple's new charge structure for alternative app stores "may be defeating the purpose" of its DMA responsibilities.
Apple faces a slew of legal challenges and Monday's statement adds to the company's problems.
The Department of Justice (DOJ) is suing Apple for allegedly creating an anti-competitive “moat” around its monopolizing iPhone ecosystem.
The Department filed its lawsuit on March 21 in New Jersey federal court, claiming that Apple had utilized “broad-based, exclusionary conduct” to make it difficult for Americans to change smartphones and for companies to supply applications, products, and services to iPhone users.
16 state attorneys general joined the federal government in putting forward the civil claim.
A monopoly manipulating the market
In a statement, US Attorney General Merrick Garland said, "Consumers should not have to pay higher prices because companies violate the antitrust laws."
"We allege that Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law. If left unchallenged, Apple will only continue to strengthen its smartphone monopoly," Garland added.
The lawsuit stated that the iPhone monopoly has driven Apple’s “astronomical valuation” at the cost of consumers and other technology companies as the company’s market capitalization of over $2.6 trillion is second only to Microsoft’s $3.2 trillion.
After the lawsuit was revealed, Apple's stock decreased 4.1%, erasing over $100 billion in market value.
The case criticizes Apple’s so-called "walled garden" business model, which makes the company’s products widely unreachable to competitors.
Apple monopolized the smartphone app market by obstructing advances from competitors as the lawsuit said, “By stifling these technologies, and many others, Apple reinforces the moat around its smartphone monopoly not by making its products more attractive to users, but by discouraging innovation that threatens Apple’s smartphone monopoly."
