The EU Takes Aim: Investigations into Apple, Google, and Meta
Following on from our recent article detailing the nuts and bolts of the EU’s shiny new legislation aiming at tackling the dominance of certain Big Tech companies, or “Gatekeepers” as the Digital Markets Act (DMA) and Digital Services Act (DSA) call them, we thought it would only be right to report on the first big test for these laws.
March 2024 not only marks the introduction of the DSA, but also the EU’s first significant step in utilising said laws with its opening of investigations into Apple, Alphabet (Google’s parent company), and Meta under the DMA. The bases for these investigations are potential non-compliance with the DMA’s provisions.
Particularly given how long (or not) it’s been since these laws were introduced, this move marks a pivotal moment in the ongoing battle for a fairer and more competitive digital landscape.
With these so-called gatekeepers controlling core platform services like search engines, social media platforms, and their respective app stores, the EU is taking the view that their market dominance is hindering competition and stifling innovation. To that end, the DMA outlines a set of obligations for gatekeepers, including:
Allowing app developers to inform users about alternative payment methods and pricing outside the gatekeeper’s platform (anti-steering provisions).
Ensuring fair competition in search results and preventing self-preferencing of the gatekeeper’s own services.
Obtaining user consent for combining personal data collected across different services.
The EU’s antitrust chief, Margrethe Vestager, expressed concerns that the initial compliance measures submitted by Apple, Google, and Meta may not have fully met the DMA’s requirements, which is what brings us to today.
One key area of investigation is Apple’s App Store and its compliance with those anti-steering provisions. Apple has historically restricted app developers from informing users about alternative payment methods or directing them outside the App Store for purchases — exactly what the EU is looking to curb — and these practices have been criticised for inflating costs for consumers and hindering app developer revenue.
The EU Commission suspects that Apple’s proposed solutions, which may allow some limited communication about alternative pricing, still impose various restrictions, such as fees associated with in-app communication or limitations on the type of information developers can share. The investigation will determine whether Apple’s approach allows for genuine transparency and empowers users to make informed choices.
Another focus of the investigation is Google’s search engine and its potential for self-preferencing. The DMA prohibits gatekeepers from favouring their own services in search results over those of competitors and the EU Commission is concerned that Google’s current search algorithm could prioritise results for its own vertical search services, like Google Shopping or Google Flights, over similar offerings from competitors, potentially stifling innovation and limiting consumer choice.
The investigation will delve into Google’s search algorithms to assess transparency and potential bias. It will also explore whether users are presented with a truly diverse range of search results that reflect genuine competition within the online marketplace.
The third investigation targets Meta’s recently implemented “pay or consent” model. This model essentially gives users a choice between paying for an ad-free experience on Facebook and Instagram or allowing Meta to collect and use their personal data for targeted advertising.
The EU Commission worries that this model might not offer a genuine alternative to the existing paradigm. Users who choose not to pay might be subject to limitations or a less enjoyable experience, effectively pressuring them into consenting to data collection, which could violate the DMA’s provision requiring explicit user consent (presumably without duress) for personal data use.
The investigation will analyse the design and implementation of Meta’s model, assessing whether it provides a fair and balanced choice for users. It will also explore whether users truly understand the implications of each option and are empowered to make informed decisions regarding their data privacy.
The outcome of these investigations could have significant repercussions for both the tech giants and the digital landscape as a whole. If found non-compliant with the DMA, Apple, Alphabet, and Meta could face hefty fines, potentially running into the billions of euros. More importantly, the companies might be forced to implement significant changes to their business practices, which could be applied worldwide as opposed to solely inside the EU.
For Apple, this could mean allowing developers more freedom to inform users about alternative pricing and payment methods within their apps. For Alphabet, they may need to modify Google’s search algorithm to ensure fair representation of competing services in search results. For Meta, they could be required to redesign its “pay or consent” model to provide a truly balanced choice for users regarding data privacy.
Beyond the immediate impact on these specific companies, the DMA investigations set a strong precedent for regulating Big Tech around the globe. If all goes to the EU’s plan, this could pave the way for a more open and competitive digital market, fostering innovation and empowering users with greater control over their online experiences.
The investigations are also likely to be closely watched by other regulatory bodies around the world, as the DMA’s groundbreaking approach may well inspire similar legislation in other regions seeking to rein in the power of Big Tech and promote a fairer online environment.
