European Commission launches investigations into Alphabet, Apple, and Meta under Digital Markets Act
On 25 March 2024, in a significant move aimed at ensuring fair competition and consumer choice in the digital sphere, the European Commission initiated non-compliance investigations against tech giants Alphabet, Apple, and Meta under the Digital Markets Act (DMA).
Background
The DMA aims to regulate gatekeepers in the digital sector, ensuring fair and contestable markets. Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft were designated as gatekeepers by the Commission in September 2023. The non-compliance proceedings against Alphabet, Apple, and Meta have been initiated pursuant to Articles 13, 20, and 29 of the DMA, targeting breaches of specific DMA obligations.
The investigations
- Alphabet's and Apple's steering rules: The Commission has opened proceedings to evaluate whether Alphabet and Apple have adhered to their obligations regarding app stores under the DMA. Specifically, the investigation focusses on whether the companies' measures impede app developers' ability to steer consumers to offers outside their respective app stores, as mandated by Article 5(4) of the DMA. Concerns have been raised regarding the restrictions and charges imposed by Alphabet and Apple, potentially limiting developers' freedom to promote offers and conclude contracts.
- Alphabet's measures to prevent self-preferencing: Alphabet faces scrutiny over its display of Google search results, with suspicions that it might lead to self-preferencing of its own services over rival offerings. The Commission is investigating whether Alphabet's measures comply with the DMA's requirement for fair treatment of third-party services vis-à-vis its own vertical search services, such as Google Shopping and Google Flights.
- Apple's compliance with user choice obligations: Apple's measures regarding user choice within the iOS ecosystem are also under examination by the Commission. This includes the ease of uninstalling software applications, changing default settings, and the effectiveness of choice screens for selecting alternative default services like browsers or search engines. Concerns have been raised that Apple's measures may hinder users from exercising genuine choice, contravening Article 6(3) of the DMA.
- Meta's "pay or consent" model: Meta is being investigated over its "pay or consent" model for user data usage. The Commission is assessing whether this model, which offers users a binary choice of either consenting to data usage or paying for services, complies with Article 5(2) of the DMA. There are apprehensions that this model may not provide a genuine alternative for users who refuse consent, potentially thwarting the DMA's objective of preventing personal data accumulation by gatekeepers.
Other on-going investigations
Apart from the investigations into Alphabet, Apple, and Meta, the Commission is also examining Amazon's marketplace practices and Apple's new fee structure for alternative app stores.
Next steps
The European Commission's launch of non-compliance investigations against Alphabet, Apple, and Meta signals a pivotal moment in the regulation of the digital economy. The European Commission aims to conclude the investigations within 12 months and if warranted, the Commission will communicate its preliminary findings to the concerned gatekeepers.
In case of infringement, the Commission has the authority to impose fines of up to 10 per cent of the company's total worldwide turnover, with the possibility of increasing fines up to 20 per cent for repeated infringement.
The Commission’s press release can be found here.