EU targets Alphabet, Apple and Meta in wide-ranging investigations

European Union regulators told Alphabet, Apple and Meta on Monday that they are under investigation over a range of potential breaches of the region's new competition law.

These investigations are the first announced by regulators since the Digital Markets Law came into effect on March 7, and they indicate the bloc’s intention to strictly implement comprehensive competition rules. The law requires Alphabet, Apple, Meta and other tech giants to open up their platforms so smaller competitors can access their users, potentially affecting app stores, messaging services, internet search, social media and online shopping.

The investigations in Brussels add to the regulatory scrutiny facing the world's largest technology companies. Last week in Washington, the Department of Justice filed a lawsuit against Apple for violating antitrust laws with practices intended to keep customers dependent on their iPhones and reduce the likelihood of switching to a competing device. Google and Amazon are also facing federal antitrust lawsuits.

The EU investigations focus on whether Apple and Alphabet, Google's parent company, unfairly favored their own app stores to drive out competitors, particularly restrictions that limit how app developers communicate with customers about sales and other offers. Google is also being investigated over the display of search results in Europe, while Meta will be questioned over a new ad-free subscription service and the use of data to sell ads.

The European Commission, the executive arm of the European Union, can impose fines on companies of up to 10% of their global revenues, each of which amounts to hundreds of billions of dollars annually. The committee has 12 months to complete its investigations.

Companies have already announced a number of changes to their products, services and business practices to try to comply with the Digital Markets Act. But when announcing the investigations on Monday, organizers said their changes did not go far enough.

“Some compliance measures are failing to achieve their objectives and falling short of expectations,” said Margrethe Vestager, executive vice-president of the European Commission, who announced the investigations at a news conference in Brussels. Complying with the law is “something we take very seriously,” she said.

The investigations intensify a years-long campaign by European regulators to loosen the grip of the largest technology companies on the digital economy. This month, Mrs. Vestager Announce A €1.85 billion ($2 billion) fine against Apple for unfair business practices related to the App Store. Google and Meta have also been the subject of EU investigations.

The Digital Markets Act, first passed in 2022, was intended to give European regulators more power to force tech giants to change their business practices without the lengthy process of filing traditional antitrust lawsuits, which can take years to resolve. A key aspect of the law is that companies cannot favor their own services over similar products offered by competitors.

As part of the investigations, Alphabet, Apple and Meta will now be required to disclose more information to regulators about their business practices. The companies said they made changes to comply with the new rules.

Among the changes, Apple announced in January that developers will have new ways to reach customers in the European Union, including allowing third-party app stores to be available on iPhone and iPad for the first time. Google has also made changes to its products, including how it displays search results for flights, hotels, and shopping services.

Meta has created a new subscription service that allows EU users to pay €13 per month if they want to use Facebook and Instagram without ads. Regulators said the policy essentially forces users to either pay a fee or agree to have their personal data used to target ads.

“The Commission is concerned that the binary choice imposed by Meta's 'pay or consent' model may not provide a realistic alternative in the event that users do not consent,” the commission said in a statement.

A spokesman for Meta said it would “continue to work constructively with the committee.” Apple said it “demonstrated flexibility and responsiveness to the European Commission and developers, listening to and incorporating their feedback.” Oliver Bethell, Google's director of competition, said the company “will continue to defend our approach in the coming months.”

Many in the technology industry have questioned how aggressively EU regulators will enforce the new competition law. In Brussels, technology companies participated in workshops on how to implement the rules. Meanwhile, many app developers, competitors and consumer groups have complained to regulators that the changes the companies have made so far have not gone far enough.

“Today’s opening of investigations into Meta, Google and Apple is a sure sign that the Commission is serious about enforcing the Digital Markets Act,” said Monique Goens, director general of the European Consumer Organization, a group in Brussels that has criticized the Digital Markets Act. Technology industry.

On Monday, regulators also said they were collecting information about Amazon's compliance with the Digital Markets Act. Regulators said the company may be favoring its own branded products in its online store, in violation of the law.