The European Commission is investigating Alphabet, Apple, and Meta for potentially not following the Digital Markets Act, aimed at preventing big tech firms from dominating digital markets. In a statement on March 25, the commission, representing the 27-nation European Union bloc, disclosed that it’s examining Alphabet’s regulations regarding steering in Google Play and self-preferencing on Google Search, Apple’s guidelines on steering in the App Store and the choice screen for Safari, and Meta’s “pay or consent model.
The European Commission is also looking into Apple’s new fees for other app stores and how Amazon ranks products on its online marketplace.
EU’s Drive for Fairness in Digital Markets
The European Commission is determined to ensure fairness in digital markets, especially with certain large online platforms acting as “gatekeepers.” Through initiatives like the Digital Markets Act and the Digital Services Act, they aim to regulate these platforms and prevent monopolistic behaviors. Identified in September 2023, six companies—Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft—have been designated as gatekeepers, covering 22 essential platform services, signifying the EU’s commitment to fostering competition and transparency in the digital realm.
European Union’s digital strategy centers on two key acts: the Digital Services Act and the Digital Markets Act. These acts are crucial for regulating online platforms and ensuring fairness in digital markets. In September 2023, six major companies—Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft—were labeled as gatekeepers, responsible for 22 essential platform services. These gatekeepers, which offer services like search engines and social networks used by other businesses, must follow guidelines to create fair competition and provide users with more options. However, the European Commission suspects that these gatekeepers aren’t fully complying with their obligations under the Digital Markets Act (DMA), which came into effect on March 7. The Commission aims to complete its investigations within 12 months.
EU Warns Gatekeepers of Heavy Fines
The European Commission aims to wrap up ongoing investigations within 12 months. Companies found guilty of breaking the rules could face fines of up to 10% of their global revenue, which could increase to 20% for repeat offenses. The Digital Markets Act, which took effect on March 7, seeks to create a fairer digital space. Despite ongoing discussions with major players like Alphabet, Apple, and Meta, the Commission remains skeptical about their compliance efforts. Thierry Breton, Commissioner for Internal Market, warns that they could face significant penalties if these companies fail to meet their obligations under the DMA.
Concerns Raised Over User Consent and Fair Treatment
Under the Digital Markets Act (DMA), gatekeepers must obtain users’ consent freely to use their personal data across various services. However, the European Commission doubts the true freedom of consent when users are presented with a binary choice. According to the Commission, users who decline consent should still be offered a less personalized alternative of the service, possibly supported by contextual advertising, without requiring payment. However, they assert that Alphabet’s services, such as Google Shopping, Google Flights, and Google Hotels, continue to receive preferential treatment, while third-party services appear to be treated unfairly and discriminatorily.
Ensuring Consumer Choice and Anti-Steering
According to the Digital Markets Act (DMA), consumers must be fully informed about their choices, including cheaper options outside the gatekeeper’s ecosystem. Gatekeepers are now prohibited from preventing their business users from informing consumers within the app about these alternatives, a practice known as anti-steering. However, the European Commission notes concerns with how Apple and Alphabet have implemented these rules. They highlight that both companies still impose recurring fees and restrict steering, which may contradict the law’s intent. Investigations into the extent of these fees and limitations are underway, with cases expected to conclude within the next 12 months.
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