Brussels investigates Alphabet, Meta and Apple for violating the digital markets directive

Pablo R. SuanzesBrussels Correspondent

Brussels Correspondent

Updated Monday, March 25, 2024-12:01

The European Commission announced this Monday the opening of a formal investigation into Alphabet (Google's parent company), Apple and Meta for non-compliance with the Digital Markets Directive. The EU Competition services have detected different violations by North American multinationals. Specifically, from

Alphabet

due to Google Play rules and self-preference in the search bar of the main search engine on the planet. On

Apple

's part , in the same in its App Store and the choice screen for Safari, and in the case of

Meta

, for the "payment or consent model."

The Commission considers that the measures taken by companies, which due to their size and number of customers are considered 'designated gatekeepers', are not sufficient to effectively fulfill their obligations under the DMA, which was approved in 2022. Furthermore, the Commission has opened a file on Apple's new fee structure for alternative app stores and on Amazon's ranking practices in its marketplace. Finally, as explained in a statement, the Commission has ordered all gatekeepers to "

retain certain documents to monitor the effective application and compliance with their obligations

."

"Today, the Commission opens five investigations for non-compliance under the Digital Markets Act (DMA). We suspect that the solutions suggested by the three companies do not fully comply with the regulations and we will investigate compliance to ensure open and competitive digital markets in Europe "said Community Vice President

Margrethe Vestager

, responsible for Competition. "The Digital Markets Act came into force on March 7. We have been in talks with gatekeepers for months to help them adapt, and we can see that changes are happening in the market. But we are not convinced that the solutions from Alphabet, Apple and Meta respect their obligations

to create a fairer and more open digital space for European citizens and businesses

. If our investigation concludes that the WFD is not fully complied with, the guardians could face heavy fines," warned French

Commissioner

Thierry Breton

. of the Internal Market.

According to the legislation, in case of infringement, the Commission can impose fines of

up to 10% of the company's total turnover worldwide

. And they can reach up to 20% in case of recidivism. Furthermore, in cases of systematic infringements, the Commission may also adopt additional remedies, such as forcing the gatekeeper to sell a company or parts of it, or prohibiting it from acquiring additional services related to the systemic non-compliance.

Article 5.4 of the directive requires gatekeepers to allow app developers to "direct" consumers

to offers outside their stores for free

. But technicians, after speaking with the rest of the sector, believe that Alphabet and Apple's measures still

impose "various restrictions and limitations

. "

This limits, among other things, they say, "the ability of promoters to freely communicate and promote offers and enter into contracts directly, including by imposing various charges."

The same thing happens with search engines. The Commission has opened proceedings against Alphabet to determine whether the display of Google search results

would be prioritizing Google's vertical search services

(for example, Google Shopping, Google Flights or Google Hotels) over similar rival services. "The Commission is concerned that Alphabet's measures implemented to comply with the DMA do not ensure that third-party services appearing on Google's search results page

are treated fairly and non-discriminatory

compared to Alphabet's own services. as required by article 6.5 of the WFD," the statement says.

The case of Apple is similar but not the same. This is about clarifying whether you are allowing users to "

easily uninstall any software app on iOS

", easily change default settings on iOS, and showing users choice screens that should allow them to efficiently and easily select an alternative default service, like a browser or a search engine on your iPhone." The Commission is concerned that the company's measures, "including the design of the web browser choice screen," may be preventing users from actually exercising their choice.

Finally, in the case of Meta, owner of Facebook or Instagram, the question is whether "the recently introduced 'payment or consent' model for EU users complies with Article 5(2) of the WFD, which requires gatekeepers to obtain consent from users when attempting to combine or cross-use their personal data across different major platform services.” The Commission suspects that the "binary choice imposed by Meta's 'pay or consent' model

does not provide a real alternative in case users do not give their consent

, thus failing to achieve the objective of preventing the accumulation of personal data by of the guardians."

The announced investigation also has some other ramifications. There is no specific indication but the Commission is collecting information and testimonies from the sector to clarify whether Amazon is giving preference to its own branded products in its store, against the directive, and if Apple's new fee structure and other terms and conditions for alternative app stores and web-based app distribution (downloading) "may be defeating the purpose of their obligations."

Unlike other investigations, where there is no defined deadline, Vestager's team says it intends to conclude the procedure opened today

within 12 months

. "If warranted following the investigation, the Commission will inform affected gatekeepers of its preliminary findings and explain the measures it is considering taking or should take to effectively address the Commission's concerns."