By Foo Yun Chee, Bart H. Meijer
BRUSSELS (Reuters) -Apple, Alphabet (NASDAQ:GOOGL)'s Google and Meta Platforms (NASDAQ:META) will be investigated for potential breaches of the EU's new Digital Markets Act, European antitrust regulators said on Monday, potentially leading to hefty fines for the companies.
The European Union law, effective from March 7, aims to challenge the power of the tech giants by making it easier for people to move between competing online services like social media platforms, internet browsers and app stores. That should in turn open up space for smaller companies to compete.
Violations could result in fines of as much as 10% of the companies' global annual turnover.
U.S. antitrust regulators are also challenging Big Tech over alleged anti-competitive practices in a crackdown that could even lead to companies being broken up.
Tech companies say they have deployed thousands of engineers to meet a Digital Markets Act requirement that six "gatekeepers" - which provide services like search engines and chat apps used by other businesses - give users and rivals more choices.
But the European Commission said on Monday it suspected that the measures taken fall short of effective compliance under the DMA, confirming a Reuters story.
Asked if the Commission was rushing the process just two weeks after the act kicked in, EU industry chief Thierry Breton said the investigations should not be a surprise.
"The law is the law. We can't just sit around and wait," he told a press conference.
APPLE COMPLIANCE
At issue is whether Apple (NASDAQ:AAPL) complies with obligations to allow users to easily uninstall software applications on its iOS operating system, to change default settings on iOS or access choice screens allowing them to switch to a rival browser or search engine on iPhones.
Another concern for regulators is "steering": whether Apple imposes limitations that hinder app developers from informing users about offers outside its App Store free of charge.
Apple said it was confident its plan complied with the DMA, adding that it had shown responsiveness to the Commission and developers throughout the process and incorporated their feedback into its changes.
Regulators say the anti-steering issue also applies to Alphabet. The investigation will examine whether it favours its vertical search engines such as Google Shopping, Google Flights and Google Hotels over rivals, and whether it discriminates against third-party services on Google search results.
FEES OR NO FEES
The Commission also singled out Apple and Alphabet's fee structures, saying they went against the DMA's "free of charge" requirement. Both companies recently introduced new fees for some services.
Breton said Meta, which introduced a no-ads subscription service in Europe last November that has triggered criticism from rivals and users, should offer free alternative options.
A Meta spokesperson said the company was endeavouring to comply with the act's guidance.
"Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA," the spokesperson said.
Google said it has made significant changes to its services and would defend its approach in the coming months.
The Commission is also taking steps to investigate Apple's new fee structure for alternative app stores and Amazon (NASDAQ:AMZN)'s ranking practices on its marketplace.
Amazon is another DMA "gatekeeper", along with Microsoft (NASDAQ:MSFT) and TikTok's Chinese owner ByteDance.
"Amazon is compliant with the Digital Markets Act and has engaged constructively with the European Commission on our plans since the designation of two of our services," an Amazon spokesperson said. "We continue to work hard every day to meet all of our customers' high standards within Europe's changing regulatory environment."
The EU executive, which aims to wrap up the investigations within a year, the timeframe set out under the DMA, said it has ordered the companies to retain certain documents, allowing them to access relevant information in its current and future probes.
The EU investigations came amid escalating criticism from apps developers and business users about shortcomings in the companies' compliance efforts.