Danish Kapoor
Danish Kapoor

European Commission Launches Investigation Against Major Technology Companies Under the Digital Markets Law

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The European Commission announced today that it has launched five separate non-compliance investigations to evaluate the extent to which Apple, Google and Meta comply with the new Digital Markets Act (DMA) antitrust rules. “We suspect that the solutions proposed by the three companies do not fully comply with the DMA,” said Margrethe Vestager, the European Union's antitrust chief. He said: “We will now investigate companies' compliance with the DMA to ensure open and competitive digital markets in Europe.”

Focus of EU investigation

Specifically, the commission plans to examine Apple and Google's anti-referral rules in their app stores and whether Google should prioritize its own services on its search engine. Also being examined are Apple's browser selection screen for iOS and Meta's “pay or approve” model for ad targeting. The commission aims to conclude the investigations within the next 12 months.

On the other hand, the European Union regulator is also examining Apple's announced fee structure for app distribution outside the App Store and whether Amazon prioritizes its own products in its store. In addition, the commission announced that Meta was given an additional six months to make Messenger compatible with other messaging services.

“We are not convinced that the solutions from Alphabet, Apple and Meta respect their obligation to create a fairer and more open digital space for European citizens and businesses.” said EU Commissioner Thierry Breton. “If our investigation concludes that full compliance with the DMA has not been achieved, gatekeepers could face severe penalties.”

Following the investigation, the Commission will advise each gatekeeper how it should address concerns, as well as what actions the regulator intends to take. If non-compliance is found, the EU Commission will have the power to fine each company up to 10 percent of their annual global revenue under the DMA, with this rate rising to 20 percent for repeated infringements.

Earlier this month, six major tech companies designated as gatekeepers under the DMA were forced to begin complying with the rules. These include rules like giving customers the option to change default apps and remove gatekeeper's pre-installed apps, prohibiting gatekeeper from ranking first-party services higher than competitors, and allowing third-party app stores.

Compliance issues with the Digital Markets Law

Europe's antitrust chief, Margrethe Vestager, told Reuters that the Commission would look more closely at the possibility that Apple would not be tempted to take advantage of the DMA in any way due to concerns about its compliance with the regulation.

This announcement comes after intense criticism, particularly regarding how Apple has complied with the Digital Markets Act. Although it allowed alternative app stores on iOS in accordance with the new rules, the company was criticized for doing this with a new fee structure that Apple claimed would deter app distribution outside the App Store. Spotify called Apple's compliance a “complete and utter nonsense,” while Epic CEO Tim Sweeney called the changes a “Malicious Compliance.”

Meta's “pay or approve” model has also received complaints from various EU regulatory bodies. The company launched a new subscription service in the EU last year that allows users to pay 9.99 euros a month to use Facebook or Instagram ad-free. This subscription was designed as a way to obtain user consent to collect their data if users do not want to pay. However, the Commission is concerned about the “binary option” offered by Meta. Last week, Meta said it was offering to reduce the monthly price of ad-free access to 5.99 euros to satisfy regulators.

As a result, these investigations launched by the European Commission against technology giants such as Apple, Google and Meta emphasize the importance of effective implementation of the DMA and the necessity of the digital ecosystem in Europe to have a more fair and competitive structure. These developments in the technology sector can have significant consequences both for users and businesses in Europe and for global digital markets. These steps by the European Commission are important steps towards making digital markets more fair and competitive.

Danish Kapoor