In recent news, the European Commission, a separately operated branch of the EU, has launched five individual non-compliance probes into U.S. tech giants Apple, Meta and Alphabet, marking the Commission’s first investigation under the newly implemented Digital Markets Act (DMA). As major tech companies, Apple in particular, face increased levels of regulatory scrutiny, the Commission’s probes announced last week that they will begin to investigate the Cupertino-based outfit as well as Google-owned Alphabet. According to recent reports, the Commission suspects both companies of unfairly favoring their own app stores. On the flip side, Meta has also come under fire, with Commission representatives now questioning whether the company’s “pay or consent” subscription model violates the new act.
Enacted in 2022, the DMA is a complex antitrust law that imposed a series of new rules on tech giants, subsequently classifying them as “gatekeepers” since they provide a gateway between business users and tech consumers, ensuring an open market is maintained. Last fall, the Commission designated six tech companies, Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, as said gatekeepers. These companies, five of which are U.S.-based, were ordered to fully comply with the DMA by early March of this year.
Thierry Breton, the current EU commissioner who’s tasked with overseeing the internal market, said that the Commission has been in talks with gatekeepers for months to help them adapt to the new law. “But 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,” stated Breton, as originally reported by Law.com.
Moving forward, the Commission will look into whether Apple and Alphabet are, in fact, violating the DMA’s requirement to allow app developers to “steer” consumers to offers outside the gatekeepers’ app stores, eliminating any opportunity for favoritism. With that, Apple was already previously penalized for its “anti-steering provisions” earlier this month when the Commission hit the company with a €1.84 billion (roughly $2 billion) fine for “unfair trading conditions.”
The Commission will also look at whether Alphabet’s display of Google search results leads to the self-preferencing of Google’s services over similar competitors’ services. Additionally, Google newly implemented product changes to help users find comparison sites in the area of their choice. But the Commission said it is concerned that the measures implemented by Alphabet to comply with the DMA “may not ensure that third-party services featuring on Google’s search results page are treated in a fair and non-discriminatory manner in comparison with Alphabet’s own services.”
Google’s active competition director, Oliver Bethell, said in a publicly released statement that the company will continue to defend its approach to comply with the new rules in the coming months and years. With that, Meta will also face a probe into its “Subscription for No Ads” plan announced last October. Through this plan, European users can simply pay a monthly fee to have an ad-free experience on Facebook and Instagram. The Commission said its concern lies in the fact that “the binary choice imposed by Meta’s ‘pay or consent’ model may not provide a real alternative if users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers.”
Similarly to Google, a Meta spokesperson was quick to ensure the public that the model is completely sound. “Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA,” stated a representative. In the coming weeks, Meta states that it remains committed to “continue to engage constructively” with the Commission.
The Commission said it fully intends to conclude its investigation over the next year. Should any instances of non-compliance be found, a company could be fined up to 10% of its global revenue. If infringements are repeated, the fines can grow in denomination, going as high as 20%. Lastly, if the infringements are deemed systemic in nature, the Commission said it may require a gatekeeper to sell a business or significant portions of it as well as ban said company from making similar acquisitions in the future.
As Apple faces two new probes in Europe, it also finds itself up against a sweeping lawsuit in the U.S., after the Justice Department accused the tech company of maintaining monopoly power in the smartphone market by violating federal antitrust law.
Presently, the EU executive council, which aims to wrap up all investigations within the next year, stated it has directed the companies involved to retain certain documents, allowing them to access relevant information in its current and future probes. These EU probes arrived amid a period of escalation in the tech world, as apps developers, business owners and consumers continue to air the gatekeepers’ shortcomings in terms of compliance efforts.
