Europe’s antitrust regulators were eager to use their shiny new weapon. Less than three weeks after the Digital Markets act went into force, and with compliance workshops ongoing, they announced investigations into three of the six “gatekeepers.” If found guilty, Apple, Alphabet and Meta could face fines of as much of 10% of their global turnover.
The dramatic escalation underlines how Europe will be aggressive in reining in what it considers the unchecked power of the largest US companies. Regulators have 12 months to complete their probes. It’s uncharted territory, requiring big changes in key outline service – and the most ambitious effort ever to regulate the online world.
Washington is watching. Although the DMA targets five of the largest US Silicon Valley success stories, the Biden Administration shares similar concerns. On March 21, the US Justice Department sued Apple for creating a smartphone monopoly, mirroring many European arguments. Earlier, the Justice Department sued Google for abusing its dominance in Internet search and digital advertising. Together, they represent the most serious antitrust offensive since the case the department brought against Microsoft in 1998.
Like their Brussels counterparts, US trustbusters say the Silicon Valley giants are impeding innovation, reducing consumer choice, and extending their dominance to other markets. The US depends on traditional antitrust law, proving that a monopoly or dominance exists and that it has been abused. European regulators don’t require such proof – the DMA requires gatekeepers to respect a broad list of dos and don’ts.
The companies have already announced changes to their products and detailed their compliance plans at five long days of hearings in Brussels. For the most part, the tone remained dry and legalistic. Competitors and consumers complained. Companies defended. While regulators remained silent and neutral, it’s clear now that they sided with the complainers. Here’s a snapshot rundown of the hearings and, in alphabetic order, the issues that regulators are investigating.
- Alphabet: Google’s parent company needs to stop favoring its own content. In its search results and to open its Google Play store. The changes create winners and losers. Instead of searching for addresses or locations and seeing Google Maps pop up, European users can no longer click on the map. Google also says the ban on self-preferencing means more searches go to aggregators such as Booking.com and fewer directly to restaurants and hotels. During the hearing, participants derided Google’s changes as “anti-competitive,” “non-compliant,” “not substantial,” and “still not implemented, despite the implementation deadline being weeks ago.” Regulators seem to agree.
- Apple: The iPhone giant must allow outside app stores and alternative payment services or the first time on its platforms. But Apple’s proposed fees remained contentious. App developers can stick with the current plan or move to a new one outside of Apple’s app store, costing €0.50 a download after a million downloads. Many companies fear that this system will force them to pay more to Apple than they now do. Apple has expressed concerns about the impact of the changes on privacy and security. During its hearing, Apple officials insisted that a single app store allows it to maintain the highest standards of security – and that this advantage risks being lost with alternative stores that have less stringent controls.
- Meta: The Facebook and Instagram owner introduced a paid €9.99 ad-free subscription service in Europe last November, designed to obtain user consent to obtain permission to target ads and “to comply with a unique combination of connected and sometimes overlapping EU regulatory obligations.” Regulators expressed concern with what they called the “binary choice.” Meta has offered to reduce the monthly price of ad-free access to €5.99 a month. Regulators remain unconvinced.
- Amazon: The online retail giant already committed in an antitrust case to stop using data of third-party sellers for its own benefit as a retailer. Regulators now say they are gathering information about Amazon’s compliance, suggesting the company might be favoring its own branded products in its online store, in violation of the law. But unlike with Alphabet, Apple and Meta, the regulators have not yet opened a formal investigation.
Compliance workshops for TikTok owner Byte Dance and Microsoft offered few fireworks and the European Commission has refrained from opening cases against them. Byte Dance contests its designation as a gatekeeper, seeing itself as a “challenger” social app and politically persecuted for its Chinese ownership. And the DMA only forced Microsoft to make uncontroversial changes.
All the companies insisted that their plans comply with the new regulation. All said they will fight the Commission, in court if needed. The announcement of the probes itself is contentious. “The timing of these announcements, while the DMA compliance workshops are still ongoing, makes it look like the Commission could be jumping the gun. Possible outcomes aside, this move risks confirming industry fears that the DMA compliance process might end up being politicized,” argues Daniel Friedlander of the tech association CCIA. The message is clear: expect a titanic battle between Brussels and Silicon Valley.
Bill Echikson is a non-resident Senior Fellow at CEPA and editor of Bandwidth.
Clara Riedenstein, Maria Hadjicosta, and Eduardo Castellet Nogues contributed to this report.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
Tech 2030
A Roadmap for Europe-US Tech Cooperation
