As Big Tech scrambles to meet EU rules, investigations seen as likely

[March 08, 2024]  By Foo Yun Chee

BRUSSELS (Reuters) -The world's biggest tech companies have overhauled their core platform services to comply with EU rules forcing them to play fairer with rivals but will likely face investigations ahead amid criticism their efforts may have fallen short.

The Digital Markets Act (DMA) is one of the most comprehensive regulatory actions to rein in so-called "Big Tech" - Google, Apple, Amazon, Microsoft, Meta and TikTok owner ByteDance - and is expected to reshape the global technology industry after decades of unfettered growth.

Criticism from rivals and users and cautionary comments from watchdogs suggest a couple of the six companies may be in the regulatory crosshairs over potential non-compliance in the coming months.

If any of the six tech giants are not compliant with the Digital Markets Act (DMA) by the EU's Thursday deadline, they could ultimately face investigations and potentially fines of up to 10% of their global turnover.

The European Commission's reaction to the compliance efforts could take several months as they review the changes and build up a watertight case able to withstand a legal challenge.

Apple is the most affected by the DMA, which forces the iPhone maker to open up its closed ecosystem such as allowing software developers to distribute their apps to users in the European Union outside of its own App Store.

Yet its introduction of new fees such as a "core technology fee" of 50 euro cents per user account each year even if developers opt not to use Apple's App Store or payment system has already caught EU antitrust chief Margrethe Vestager's eye.

Vestager said on Monday that novel fee structures should not undermine the incentives for businesses to switch to rivals, after handing a 1.84 billion euro ($2 billion) fine to Apple for thwarting Spotify from showing other payment options outside its App Store. Apple has said it will appeal the decision and declined to offer further comment.

Rivals such as Swiss email service Proton, meanwhile, have said Apple's compliance efforts do not go far enough. The Commission declined to comment.

With eight core platform services subject to the DMA, more than any other company, and despite putting thousands of tech engineers to work on its compliance efforts, Alphabet's Google also runs the risk of a potential investigation.

A 3D printed Facebook's new rebrand logo Meta is seen in front of displayed Google logo in this illustration taken on November 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

The company's mandatory overhaul of its search results will benefit aggregators such as Booking.com and Expedia, which will gain more prominence and hence online traffic due to their intensive lobbying with Google.

That has already caused friction with hotels, airlines and restaurants, with some expecting to lose as much as 50% of their online traffic and possibly millions of euros in revenues as users are lured to large online intermediaries. Google declined to comment.

Meta, which said Instagram and Facebook users will be asked if their data can be shared between its services, could also run the risk of an investigation. Meta declined to comment.

Microsoft, Amazon and ByteDance may face less scrutiny initially as EU regulators focus their resources on one or two cases and ensure a case able to withstand a legal challenge, people familiar with the matter said.

Amazon said it had engaged constructively with the EU regulator on the DMA.

"We continue to work hard every day to meet all of our customers' high standards within Europe's changing regulatory environment," a spokesperson said.

Microsoft and ByteDance declined to comment.

Pressure for an EU investigation is also coming from the some of the big six companies themselves.

At least one has told the European Commission that it was not fair to have to play by the DMA rules while a rival flouts them, one person with direct knowledge of the matter said.

Unlike EU antitrust investigations which can take years to wrap, DMA enforcers have just a year to issue their findings.

($1 = 0.9173 euros)

(Reporting by Foo Yun Chee; Editing by Alexander Smith, Jamie Freed and David Evans)

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