EU targets Apple, Alphabet and Meta in wide-ranging probe
PARIS/SAN FRANCISCO: Alphabet, Apple and Meta were told by European Union regulators Monday that they were under investigation for a range of potential violations of the region’s new competition law.
The inquiries are the first that regulators have announced since the Digital Markets Act (DMA) took effect March 7, and they signal the bloc’s intention to tightly enforce the sweeping competition rules. The law requires Alphabet, Apple, Meta and other tech giants to open up their platforms so smaller rivals can have more access to their users, potentially affecting app stores, messaging services, internet search, social media and online shopping.
The investigations in Brussels add to the regulatory scrutiny facing the largest tech companies and show growing alignment between the United States and Europe on the need to crack down on the firms for anti-competitive behaviour.
Last week in Washington, the Justice Department sued Apple, arguing that the company broke antitrust laws with practices that were intended to keep customers reliant on their iPhones and less likely to switch to a competing device. Amazon, Google and Meta are also facing federal antitrust lawsuits.
EU investigators said they wanted to study whether Apple and Alphabet, the parent company of Google, are unfairly favouring their own app stores to box out rivals, particularly restrictions that limit how app developers can communicate with customers about sales and other offers. Google is also being investigated over the display of search results in Europe, while Meta will be questioned about a new ad-free subscription service and the use of data for selling advertising.
The European Commission, the EU’s executive arm, can fine the companies up to 10% of their global revenue, which for each runs into the hundreds of billions of dollars annually. The commission has 12 months to complete its investigations.
The companies had already announced a number of changes to their products, services and business practices to try to comply with the Digital Markets Act. But in announcing the investigations Monday, regulators said their changes did not go far enough.
“Certain compliance measures fail to achieve their objectives and fall short of expectations,” said Margrethe Vestager, the European Commission’s executive vice president, who announced the investigations at a news conference in Brussels. Compliance with the law, she said, “is something that we take very seriously.”
FORCING INDUSTRY CHANGE
The investigations announced Monday intensify a years-long campaign by European regulators to loosen the grip of the biggest tech companies on the digital economy. This month, Vestager announced a €1.85 billion ($2 billion) fine against Apple for unfair business practices related to the App Store. Amazon, Google and Meta have also been subject to EU investigations.
In an interview last month, Vestager said the United States and the European Union were more closely aligned now on the need to regulate the tech sector than a few years ago when she was accused of unfairly targeting American firms. She said European regulators communicated with counterparts in Washington. “I don’t think the cooperation has been better for a very long time,” she said.
The Digital Markets Act, first passed in 2022, was intended to give European regulators more authority to force the tech giants to change their business practices without the drawn-out process of filing traditional antitrust lawsuits, which can take years to resolve. A key aspect of the law is that the companies cannot favour their own services over similar products offered by rivals.
As part of the investigations, Alphabet, Apple and Meta will now be required to disclose more information to regulators about their business practices. The companies said they had made changes to comply with the new rules.
Among the changes, Apple announced in January that developers would have new ways to reach customers in the EU, including allowing outside app stores to be available on iPhones and iPads for the first time. Google also made changes to its products, including how it displays search results for flights, hotels and shopping services.
Meta created a new subscription service that allows EU users to pay €13 per month if they want to use Facebook and Instagram without advertisements. Regulators said the policy essentially forces users to either pay a fee or agree to have their personal data used to target advertising.
‘PAY OR CONSENT’ MODEL
“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,” the commission said in a statement.
A spokesperson for Meta said it would “continue to engage constructively with the commission.” Apple said it had “demonstrated flexibility and responsiveness to the European Commission and developers, listening and incorporating their feedback.” Oliver Bethell, the director of competition at Google, said the company would “continue to defend our approach in the coming months.”
Many in the tech industry have wondered how aggressively EU regulators would enforce the new competition law. In Brussels, the tech companies have been participating in workshops about how the rules would be carried out. At the same time, many app developers, competitors and consumer groups have complained to regulators that the changes made by the companies so far were insufficient.
“Today’s opening of investigations into Meta, Google and Apple is a sure sign that the commission means business in enforcing the Digital Markets Act,” said Monique Goyens, director general of The European Consumer Organisation, a group in Brussels that has been critical of the tech industry.
On Monday, regulators said they were gathering information about Amazon’s compliance with the DMA. Regulators said the company might be favouring its own products in its online store, in violation of the law.