World’s biggest tech companies facing EU investigation over uncompetitive practices

by Mick the Ram

The European Union has announced investigations into some of the biggest tech firms in the world with the likes of Meta, Apple, and Alphabet, which owns Google, coming under intense scrutiny.

They are being looked at for potential breaches of the Digital Markets Act (DMA) introduced in 2022, but only coming into force earlier in the month.

If found to be non-compliant, they could face fines of billions of euros, representing up to 10% of their annual turnover.

Just six companies have obligations under the DMA, but they are also the world’s largest tech firms: Alphabet, Apple, Meta, Amazon, Microsoft and Byte-Dance.

There are five cases which are all consumer-focused, and highly relatable to most people who use products from these companies. Collectively, this equates to literally billions of people worldwide.

An EU boss hinted that the full investigation will take around 12 months to complete.

Five potential acts of non compliance

Those EU bosses: Margrethe Vestager and Thierry Breton announcing the investigations, explained that there were five possible acts of non-compliance in total. These consisted of whether Apple and Alphabet are not allowing apps to freely communicate with users and make contracts with them and whether Apple is not giving users enough choice.

By that they are suggesting that the company’s web browser “choice screen” does not actually give people enough choice, pointing out that some apps, such as Apple Photos, cannot be deleted at all. They say Apple is obliged to allow users to easily uninstall apps on their devices and change default settings.

A fourth point centred around if Meta, the owner of Facebook, Whatsapp and Instagram, were unfairly asking people to pay a fee in their “pay or consent” subscription model, to avoid their data being used for adverts. The final query being if Google gives preference to its own goods and services in search results.

Not respecting obligations

Mr Breton said: “We’re talking about the protection of our citizens, so we can’t just sit around and wait.” He added that the Commission were 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.”

He warned that should their investigation conclude that there is lack of full compliance with the DMA, then gatekeepers could face heavy fines.

None of the firms are based in Europe, with five in the US, and the sixth – Byte-Dance, having its headquarters in Beijing.

Fresh concerns for Apple

This all comes just three weeks after the EU fined Apple 1.8 billion euros after the company was accused by the commission of “abusing its dominant position in the market” for the distribution of music streaming apps to iOS users through its app store.

An Apple spokesperson said the company will constructively engage with the investigation and that they are confident that their plan complies with the Digital Markets Act. They added that their team has established a variety of mechanisms to comply with the EU’s landmark legislation, as well as privacy and security protections for EU users.

“Throughout, we’ve demonstrated flexibility and responsiveness to the European Commission and developers, listening and incorporating their feedback”, was their confident response.

On the defensive

For their part, Meta remarked that their use of subscriptions as an alternative to advertising were a well established business model across many industries and insisted that they will continue to engage constructively with the Commission.

Google, which has made significant changes to its services, said it would “continue to defend its approach” in the coming months.

All change

The investigation is the latest in a series of restrictions being applied against tech giants, which are increasingly haggling with regulators over non-competitiveness concerns and the use of personal data, particularly in Europe.

Under the new rules of the DMU, companies are as a matter-of-course, foreseen to allow app developers to guide users to products outside their own platforms, and crucially do that for no extra charge. Also, those platforms who rank search results must treat all listings fairly and in a way that does not discriminate against services offered by third parties.