March 25, 2024:

The European Union (EU) is investigating tech giants Apple (AAPL), Google (GOOGL), and Meta (META) for allegedly violating the Digital Markets Act (DMA), which came into effect on March 7. This legislation mandates key digital service providers — including search engines, social networks, and chat apps — to follow certain guidelines designed to promote competition and broaden user choices.

The EU suspects that these companies are not in compliance with the DMA, which seeks to create a more equitable and competitive digital market environment by dismantling tech monopolies. Companies found breaching the DMA can face hefty fines, up to 10% of their global annual turnover.

The European Commission is specifically questioning if Apple and Google have adequately adhered to the DMA directive to allow app developers to guide users towards offers outside their app store platforms. It hypothesizes that these companies may be imposing various constraints and fees that limit apps from freely marketing such offers.

Additionally, Meta has drawn criticism for launching an ad-free subscription service in Europe, as it doesn’t offer a costless alternative. Apple and Google have introduced similar charges for certain services.

Earlier this month, the EU charged Apple a record €1.8 billion ($1.95 billion) antitrust fine following a complaint by Spotify, who claimed Apple was preventing music-streaming services from notifying users of payment options outside its App Store. Apple objected to the ruling, vowing to contest it in court.

Google is also under examination for potentially breaching DMA regulations that prevent tech behemoths from favoring their offerings over those of competitors. A particular concern is whether third-party services included on Google’s search results page are being treated in a balanced and impartial way.

The investigation also includes Apple’s allowance for iPhone users to easily switch web browsers, and Meta’s ‘pay or consent’ model, where users can opt for ad-free Facebook or Instagram versions for a monthly fee to avoid personalized ad targeting.

The Commission worries that this model may not provide a real alternative for users who do not consent, thus failing to successfully prevent the accumulation of personal data by digital gatekeepers.

In the larger context, the EU has been actively trying to rein in Big Tech companies, levying a series of billion-dollar fines against Google and accusing Meta of distorting the online classified advertising market. Apple’s recent penalty accounts for a quarter of Google’s cumulative fines of €8.25 billion ($8.95 billion) imposed by the EU regulator across three cases over the last decade.