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The European Commission announced on March 25 open investigations into Alphabet, Apple and Meta for alleged gatekeeping (i.e., promoting their own services above competitors’) on apps and in browsers. The investigation is the first major action taken under Europe’s Digital Markets Act since the DMA’s “gatekeeper” rules went into force in early March. The DMA, established in 2022, is intended to promote fairness and competition among digital products and services.

What is the European Commission investigating?

The European Commission is investigating possible anticompetitive practices from Alphabet, Apple and Meta, plus a separate look into Amazon’s self-promotion on its storefront.

“We suspect that the suggested solutions put forward by the three companies do not fully comply with the DMA,” wrote Margrethe Vestager, executive vice-president in charge of competition policy at the European Commission, in the press release.

Overall, the commission wants to use the DMA to enforce that tech giants must allow customers choice between providers when it comes to online services.

SEE: Everything you need to know about the EU’s AI Act, which was adopted in March. (TechRepublic)

App stores from Apple and Alphabet

The European Commission found some overlap in Alphabet’s and Apple’s handling of app stores. A major goal of the DMA is to make sure customers were aware of alternative app stores, instead of being encouraged to go through only the Apple App Store or Google Play. The measures Apple and Alphabet took to loosen up the “gates” around their app stores may not be appropriate, the new investigation suggests.

Alphabet

The European Commission says the way Alphabet presents Google search results may steer customers back to Google services, such as Shopping, Flights or Hotels. (Google temporarily removed the Flights unit from search results after the DMA went into effect in early March.)

Apple

The European Commission opened proceedings against Apple to address three main elements of its mobile design:

  • The web browser choice screen.
  • The ability to uninstall software applications on iOS.
  • The ability to change default settings on iOS.

The Commission is taking separate, additional investigatory steps to look into the fee structure Apple created for third-party app stores in response to the DMA.

Apple responded in January to the DMA’s requirements, saying accessing third-party apps on Apple devices presents security risks, including “malware, fraud and scams, illicit and harmful content.”

Meta

In November 2023, Meta introduced ad-free versions of Facebook and Instagram in the European Union for a fee, anticipating increasing regulation of how much organizations can track users of their sites for ad purposes. Now, the Commission is investigating whether the “pay or consent” model actually complies with the DMA’s privacy rules. The model “may not provide a real alternative in case users do not consent,” the Commission stated.

Amazon

The Commission announced a separate investigation into whether Amazon unfairly promotes its own products on its shopping marketplace.

What happens next under the DMA investigation?

The Commission expects the investigation to take under 12 months. Afterward, the Commission will inform Alphabet, Apple and Meta of its ruling and what actions it may take.

The major “gatekeepers” named by the DMA — Alphabet, Amazon, Apple, Meta and Microsoft — must retain certain documents considered by the Commission to be relevant to their DMA obligations. (Microsoft is technically a gatekeeper but was not named in the investigations announced March 25.)

Meta’s negotiations with the European Commission may go on longer than the others. Meta has received a six-month extension to get Facebook Messenger in line with the interoperability obligation of the DMA.

Fines for noncompliance with the DMA can be up to 10% of the company’s total worldwide turnover, going up to 20% in cases of repeated infringement. In more extreme instances, the Commission may order an organization to sell all or parts of its business or ban the organization from acquiring related services.

“We have been in discussions with gatekeepers for months to help them adapt, and we can already see changes happening on the market,” wrote Thierry Breton, commissioner for internal market at the European Commission, in the press release. “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.”

Other national and international lawmaking groups might keep a close eye on the European Commission’s dealings with tech giants, possibly leading to more regulation of software ecosystems. Tech giants operating in the EU will need to feel out new ways of operation under the DMA, and the next few years are likely to see back-and-forth between the Commission and major tech players.

Other major companies could be named gatekeepers: Booking, ByteDance (owner of TikTok) and X have notified the Commission that their services might count. It’s too early to tell whether the Commission might really throw its weight around by forcing gatekeepers to sell part of all of their businesses.

U.S. Department of Justice and attorneys general sue Apple for “monopolizing’ phones

The DMA isn’t the only government regulatory effort aimed at breaking up tech giants’ walled gardens. Last week, the U.S. Department of Justice and 16 state and district attorneys general sued Apple for “monopolization or attempted monopolization of smartphone markets.”

“Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers,” the Department of Justice wrote.

The plaintiffs will seek to break up some of Apple’s practices they see as anticompetitive, including loosening Apple’s control of app distribution, preventing Apple from using APIs to restrict cross-platform technologies, including iMessage, and forcing changes to the terms and conditions between Apple and its contractors that could potentially create or increase a monopoly.

The case will go before the U.S. District Court for the District of New Jersey.


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