London — European Union regulators opened investigations into Apple, Google and Meta on Monday, the first cases under a sweeping new law designed to stop Big Tech companies from cornering digital markets. The European Commission, the 27-nation bloc’s executive arm, said it was investigating the companies for “non-compliance” with the Digital Markets Act.
The Digital Markets Act that took effect earlier this month is a broad rulebook that targets Big Tech “gatekeeper” companies providing “core platform services.” Those companies must comply with a set of do’s and don’ts, under threat of hefty financial penalties or even breaking up businesses. The rules have the broad but vague goal of making digital markets “fairer” and “more contestable” by breaking up closed tech ecosystems that lock consumers into a single company’s products or services.
The commission said in a press release that it “suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA.”
Thierry Monasse/Getty
It’s looking into whether Google and Apple are fully complying with the DMA’s rules requiring tech companies to allow app developers to direct users to offers available outside their app stores. The commission said it’s concerned the two companies are imposing “various restrictions and limitations” including charging fees that prevent apps from freely promoting offers.
Google is also facing scrutiny for not complying with DMA provisions that prevent tech giants from giving preference to their own services over rivals. The commission said it is concerned Google’s measures will result in third-party services listed on Google’s search results page not being treated “in a fair and non-discriminatory manner.”
Google said that it has made “significant changes” to the way its services operate in Europe to comply with the DMA.
“We will continue to defend our approach in the coming months,” Google’s director of competition, Oliver Bethell, said.
In December, it was revealed that Google had agreed to pay $700 million and make several other concessions to settle allegations brought in the U.S. that it had been stifling competition against its Android app store.
The European Commission has slapped Google with antitrust penalties several times already, including a record $5 billion fine levied in 2018 over the search engine’s abuse of the market dominance of its Android mobile phone operating system.
The commission is also investigating whether Apple is doing enough to allow iPhone users to easily change web browsers.
Apple said it’s confident that its plan complies with the DMA, and it will “continue to constructively engage with the European Commission as they conduct their investigations.” The company said it has created a wide range of new developer capabilities, features, and tools to comply with the regulation.
The California company is facing a broad antitrust lawsuit in the U.S., meanwhile, where the Justice Department has alleged that Apple illegally engaged in anti-competitive behavior in an effort to build a “moat around its smartphone monopoly” and maximize its profits at the expense of consumers. Fifteen states and the District of Columbia have joined the suit as plaintiffs.
Apple has also previously fallen foul of the EU’s regulators, with a first fine against the company imposed by the bloc only several weeks ago. In its first antitrust penalty against Apple, the European Commission fined the company almost $2 billion in early March for breaking its competition laws by unfairly favoring its own music streaming service over competitors’.
Meta, also no stranger to the wrath of European regulators, is being investigated by the commission over the option given to users to pay a monthly fee for ad-free versions of Facebook or Instagram, so they can avoid having their personal data used to target them with online ads.
“The Commission is concerned that the binary choice imposed by Meta’s ‘pay or consent’ model 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,” it said.
Meta said in a prepared statement that, “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. We will continue to engage constructively with the Commission.”
The EU fined Meta $1.3 billion about one year ago and ordered it to stop transferring European users’ personal information across the Atlantic by October, in the latest salvo in a decadelong case sparked by U.S. cybersnooping fears. Meta called that decision by the commission flawed, and vowed to fight the fine.
The commission said it aims to wrap up its latest investigations into the American tech behemoths within 12 months.