Apple, Google parent Alphabet, and Facebook parent Meta are the first companies targeted by the European Union under a sweeping new law designed to stop big tech firms from cornering the market online.
The regulatory arm of the EU, the European Commission, said Monday that it is investigating the companies for “non-compliance” with the Digital Markets Act (DMA), which went into effect on March 7. The law requires six tech companies classified as “gatekeepers” — Amazon, Apple, Alphabet, Meta, Microsoft, and TikTok owner ByteDance — to follow a series of new rules for operating online.
The new rules aim to make digital markets “fairer” and “more contestable,” as the Commission increasingly looks to rein in tech giants’ dominance and maintain competition. The law allows the commission to fine companies as much as 10% of a company’s total annual global revenue, and up to 20% for repeat offenders.
“We have been in discussions with gatekeepers for months to help them adapt, and we can already see changes happening on the market,” Thierry Breton, the EU commissioner for the internal market, said in a statement Monday. “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.”
Apple, Alphabet and Meta stocks were all down about 1% in Monday morning trading.
Mountain View, California-based Google is facing probes over whether its search engine unfairly promotes its own search services — such as Google Shopping and Google Flights — over rival services. Both Google and Apple are being probed over whether their app stores allow app developers to “steer” customers to offers outside of their stores.
“To comply with the Digital Markets Act, we have made significant changes to the way our services operate in Europe,” Oliver Bethell, Google’s director of Europe, Middle East, and Africa competition, said in a statement. “We have engaged with the European Commission, stakeholders and third parties in dozens of events over the past year to receive and respond to feedback, and to balance conflicting needs within the ecosystem.”
Cupertino, California-based Apple was fined almost $2 billion on March 4, just days before the DMA went into effect, over accusations it abused its dominant position in the market for distributing music streaming apps, such as Spotify or Apple Music. The Commission said Apple had prevented developers from informing customers about alternative and cheaper music subscription services available outside of its App Store.
Additionally, the Commission is looking into whether Apple allows iPhone users to “easily” uninstall software, change settings, and change default options for search engines or browsers. Proceedings in a major antitrust lawsuit in the U.S. against Google revealed that the tech giant pays Apple billions of dollars annually to keep its search engine the default option in Apple’s safari browser.
“We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations,” Apple said in a statement, noting that it has introduced new features and tools to comply with the DMA. “At the same time, we’ve introduced protections to help reduce new risks to the privacy, quality, and security of our EU users’ experience.”
And Menlo Park, California-based Meta is being investigated over its “pay or consent” model. The tech giant last year began charging users in the EU for an ad-free subscription to Facebook and Instagram unless they agreed to be tracked and profiled for its advertising business. Desktop users shell out about €10 (nearly $11) per month, while mobile users pay roughly €13 ($14) per month.
“Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA,” a Meta spokesperson said Monday. “We will continue to engage constructively with the Commission.”
Although those are the only active probes launched by the European Commission on Monday, it’s exploring at least two others. The regulator is looking into whether Seattle-based Amazon boosts its own products on the Amazon storefront, as well as Apple’s fee structure for alternative app stores and distribution.
“We continue to work hard every day to meet all of our customers’ high standards within Europe’s changing regulatory environment,” an Amazon spokesperson said Monday, adding that the company is compliant with the DMA.
Alphabet, Amazon, Apple, Meta, and Microsoft, have been asked to retain any documents that might be used to determine whether they have complied with the DMA. The Commission expects to conclude its inquiries within 12 months.