EU Launches Investigations into Tech Giants for Potential DMA Violations
The European Union has initiated probes into several leading global tech corporations over accusations of anti-competitive behaviors.
Notably, Meta, Apple, and Alphabet (Google‘s parent company) are under scrutiny for possibly violating the Digital Markets Act (DMA), which was enacted in 2022. These companies could face substantial penalties, up to 10% of their global annual revenue, if found in breach of the regulations.
The announcement of these inquiries was made by EU’s antitrust chief, Margrethe Vestager, alongside industry commissioner Thierry Breton on Monday.
Only six firms are subject to the DMA’s stipulations, yet they represent some of the largest technology entities in the Western hemisphere: Alphabet, Apple, Meta, Amazon, Microsoft, and ByteDance. Notably, all of these companies operate from outside Europe, with five based in the United States and ByteDance headquartered in Beijing.
The investigations into three of these companies come shortly after they submitted detailed reports on their compliance efforts, just two weeks prior.
This development follows closely on the heels of a significant EU fine imposed on Apple, amounting to €1.8 billion for contravening competition regulations concerning music streaming services. Additionally, last week, the U.S. launched a groundbreaking legal action against Apple, accusing it of monopolizing the smartphone industry.
In response to the EU’s investigations, a representative from Apple expressed the company’s intent to engage constructively with the probe, asserting confidence in their compliance with the DMA. They highlighted the establishment of numerous mechanisms to adhere to the EU’s pivotal legislation while maintaining privacy and security for European users. “Throughout, we’ve demonstrated flexibility and responsiveness to the European Commission and developers, listening and incorporating their feedback,” the spokesperson remarked.
Meta also responded, with a spokesperson indicating that the company’s adoption of subscription models as an alternative to ad-based revenue is a recognized practice across various sectors. “We designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA… we will continue to engage constructively with the Commission,” they stated.
The European Union has declared its intent to launch five separate investigations to address potential violations of the Digital Markets Act (DMA), focusing on:
- The examination into whether Apple and Alphabet restrict apps from freely communicating and establishing contracts with users.
- The inquiry into whether Apple limits user choice regarding app management and default settings.
- The investigation of Meta’s practices of charging users to prevent their data from being utilized for advertising.
- The scrutiny of Google’s potential bias in search results favoring its own products and services.
These investigations notably include “anti-steering” concerns, where the EU suspects that companies may be hindering apps from informing users about alternative, cheaper payment options outside of their own app store platforms.
For Apple, the EU expects it to enable users to effortlessly uninstall apps, modify default settings, and choose alternative browsers or search engines through “choice screens,” which are currently deemed inadequate. The EU also notes that certain apps, like Apple Photos, cannot be uninstalled.
Ms. Vestager anticipates the investigations will span around 12 months, though Mr. Breton suggests it may extend slightly longer. Vestager expressed concerns that the proposals from the three companies might not fully align with DMA requirements, emphasizing the need to guarantee open and competitive digital markets in Europe.
These investigations target issues directly impacting consumers and resonate with billions of global users of these companies’ products. “We’re talking about the protection of our citizens, we can’t just sit around and wait,” Thierry Breton remarked, underlining the urgency of the EU’s actions.
Another potential factor influencing the timing of these investigations is the upcoming European Parliament elections in June 2024.
Dr. Rupprecht Podszun from the Institute for Competition Law at Heinrich Heine University in Dusseldorf views this move as a strong signal from the EU. He highlights the DMA’s goal for swift resolutions and points out that the selected cases strike at the core of the implicated companies’ business models, predicting intense legal confrontations ahead. However, he reminds that the final decision rests with the Court of Justice.
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