The European Union launched anti-competitive investigations on Monday against tech behemoths Apple, Alphabet, and Meta for potential breaches of the Digital Markets Act (DMA).
The companies are alleged to have run afoul of the DMA, a law designed to monitor large online platforms or ‘gatekeepers.’ These are businesses with a large user base, active in multiple EU countries, economically significant, and that carry a considerable impact on the market. This is the first investigation for non-compliance under the DMA.
The European Commission probes are targeting Alphabet, the parent company of Google, and Apple for favoring their own app stores, thereby limiting user choices and developer business opportunities, as well as Meta over its use of personal data.
According to the DMA, gatekeeper platforms cannot favorably rank their own services over other similar third-party platforms; prevent users from uninstalling any pre-installed software; track end users outside of the platform for advertising without consent; or prevent consumers from linking up to businesses outside their platforms.
“These decisions to open non-compliance investigations come only two weeks after the implementation deadline has passed and show that DMA compliance is something that we take very seriously,” said European Commission Executive-Vice President Margrethe Vestager, referring to the March 7 deadline date, by which, all gatekeepers had to fully comply with DMA obligations. “Our five investigations concern Alphabet, Apple, and Meta.”
Amazon, ByteDance, and Microsoft are the other three gatekeepers.
Besides these investigations, “the Commission has launched investigatory steps relating to Apple’s new fee structure for alternative app stores and Amazon’s ranking practices on its marketplace.”
Thierry Breton, commissioner for internal market said: “The Digital Markets Act became applicable on 7 March. We have been in discussions with gatekeepers for months to help them adapt, and we can already see changes happening on the market.
“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. Should our investigation conclude that there is [a] lack of full compliance with the DMA, gatekeepers could face heavy fines.”
If the companies are found guilty, they are likely to face fines of up to 10 percent of their global annual turnover or up to 20 percent in case of repeated infringements. There could also be periodic penalty payments of up to 5 percent of the average daily turnover.
Furthermore, the commission could force a gatekeeper to sell a business or parts of it in case of systematic infringements. They could also restrict the company from buying services related to DMA non-compliance.
Investigations and Allegations
In total, five investigations have been launched into Alphabet, Meta, and Apple by European regulators.
Alphabet and Apple are allegedly in breach of Article 5(4) of the DMA that requires “gatekeepers to allow app developers to ‘steer’ consumers to offers outside the gatekeepers’ app stores, free of charge.”
Both companies currently impose various restrictions and limitations, and fall short of being DMA compliant, the commission stated. The constraints imposed by the companies further restrict “developers’ ability to freely communicate and promote offers and directly conclude contracts.”
Apple has been accused of not enabling users to easily uninstall apps on iOS, easily change default settings, and easily allow for alternating between the internet browsers and search engines.
“The Commission is concerned that Apple’s measures, including the design of the web browser choice screen, may be preventing users from truly exercising their choice of services within the Apple ecosystem, in contravention of Article 6(3) of the DMA.”
Finally, the commission is investigating Facebook parent company Meta’s recently introduced “pay or consent” model for EU users, and whether it complies with Article 5(2) of the DMA, which “requires gatekeepers to obtain consent from users when they intend to combine or cross-use their personal data across different core platform services.”
The binary option provided to consumers may not be enough to fulfill DMA requirements.
Vice President Vestager said that the actions taken, thus far, by the tech giants, along with their suggested solutions, do not fully comply with the DMA, and so, the investigations were opened to “ensure open and contestable digital markets in Europe.”
The investigations are set to conclude within 12 months.
Other EU Investigations
The European Commission is also focusing its attention on Amazon. “Amazon may be preferencing its own brand products on the Amazon Store in contravention of Article 6(5) of the DMA,” said the commission. Amazon has been accused of promoting its own products over other companies on the platform.
Besides this, Apple’s new fee structure and the company’s terms and conditions, along with Facebook’s Messenger app, are under scrutiny as well.
“The Commission has also adopted five retention orders addressed to Alphabet, Amazon, Apple, Meta, and Microsoft, asking them to retain documents which might be used to assess their compliance with the DMA obligations, so as to preserve available evidence and ensure effective enforcement.”
Last week, the U.S. Department of Justice, along with 16 states, filed an antitrust lawsuit against Apple, following which, the company’s market capitalization tumbled by roughly $113 billion. It has yet to recover from the decline. The suit focused on anti-competitive practices and monopolistic behavior by Apple.
Apple hit back at the lawsuit, saying the DOJ complaint not only threatens the company’s existence but also sets a “dangerous precedent” that could negatively affect other businesses as well.
“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple, where hardware, software, and services intersect,” the company said in a statement. “[The suit] would also set a dangerous precedent, empowering the government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.”
The Epoch Times reached out to Apple, Alphabet, and Meta for comment.
From The Epoch Times