The European Commission is opening its first official probes under the Digital Markets Act with a focus on curbing the power of tech titans Apple, Meta, and Alphabet via threats of heavy fines.

Specifically, the non-compliance investigations will target Alphabet's rules on "steering" Google Play and "self-preferencing" on Google Search; Apple's rules on "steering" in its Apple Store and the "choice screen for Safari"; as well as Meta's "pay or consent" model.

The Commission said in a statement this morning that it suspects those gatekeepers "fall short of effective compliance" of their obligations under the DMA. All three have been ordered to retain certain documents to record implementation and conformity to the legislation."

Margarethe Vestager, EC exec veep, said: "These decisions to open non-compliance investigations come only two weeks after the implementation deadline has passed and show that DMA compliance is something that we take very seriously.

"We will continue to use all available tools should any gatekeeper try to circumvent or to undermine the obligations of the DMA. It is important for us to achieve the objectives of the DMA such that consumers have the benefits of open and contestable markets. A market with competition."

The looming threat of the DMA forced the trio to make concessions, tweaking their policies to fit in. Apple this month caved into pressure by allowing developers to modify how apps can be distributed outside of its App Store, along with other tweaks. Apple also implemented a browser choice screen for iPhone in a bid to comply with the DMA.

The EC said it is "concerned that Alphabet's and Apple's measures may not be fully compliant as they impose various restrictions and limitations. These constrain, among other things, developers' ability to freely communicate and promote offers and directly conclude contracts, including by imposing various charges."

The Google Search element is simply related to worries that Google is prioritizing Google Shopping, Google Flights, and Google Hotels over rival products, and that the measures it implemented to fix this fall short of the DMA.

Apple is also being probed about measures to lets customers uninstall any software application on iOS, change the default settings on the operating systems, and make it easier to users to use third party browsers.

The attention on Mark Zuckerberg's Meta will center on the recently introduced pay or consent model for EU users and whether the "binary choice" provides a real alternative if users do not consent, "thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers."

Also coming into focus of the regulators is Apple's new fee structure for alternative app stores and Amazon's ranking practices on its marketplace, and whether this benefits Amazon's own brand products.

"The Commission has also adopted five retention orders addressed to Alphabet, Amazon, Apple, Meta, and Microsoft, asking them to retain documents which might be used to assess their compliance with the DMA obligations, so as to preserve available evidence and ensure effective enforcement," the EC said.

The proceedings are intended to be done and dusted within 12 months when the gatekeepers will be informed of the preliminary findings.

"In case of an infringement, the Commission can impose fines up to 10 percent of the company's total worldwide turnover. Such fines can go up to 20 percent in case of repeated infringement. Moreover, in case of systematic infringements, the Commission may also adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it, or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance," the EC said.

The DMA was born on the back of the EC's previous antitrust experiences "where we have seen a temptation to flout the law," said Vestager.

"7 March was compliance day. We have analyzed the gatekeepers' compliance reports that we received on 7 March. We have hosted public workshops for gatekeepers to present their compliance solutions. Stakeholders provided feedback on the compliance solutions offered. Their feedback tells us that certain compliance measures fail to achieve their objectives and fall short of expectations.

"Under the DMA, gatekeepers must allow business users, free of charge, to communicate freely with end users. And also to conclude contracts directly with their users. The aim of this provision is to promote competition between alternative sales channels in the app economy. To achieve this, consumers must have access to all the necessary information about their choices.

"Gatekeepers can no longer prevent their business users from informing their users within the app about cheaper options outside the gatekeeper's ecosystem. That is called anti-steering and is now forbidden by law."

Vestager added: "The way that Apple and Alphabet implemented the DMA rules on anti-steering seems to be at odds with the letter of the law. Apple and Alphabet still charge various recurring fees and still limit steering. We will investigate to what extent these fees and limitations defeat the purpose of the anti-steering provision and by that, limit consumer choice."

Oliver Bethell, Director, Competition at Google, told The Reg: "To comply with the Digital Markets Act, we have made significant changes to the way our services operate in Europe. We have engaged with the European Commission, stakeholders and third parties in dozens of events over the past year to receive and respond to feedback, and to balance conflicting needs within the ecosystem.

"We will continue to defend our approach in the coming months."

A spokesperson at Meta told us: "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. We will continue to engage constructively with the Commission."

Apple told us: "We're confident our plan complies with the DMA, and we'll continue to constructively engage with the European Commission as they conduct their investigations. Teams across Apple have created a wide range of new developer capabilities, features, and tools to comply with the regulation.

"At the same time, we've introduced protections to help reduce new risks to the privacy, quality, and security of our EU users' experience. Throughout, we've demonstrated flexibility and responsiveness to the European Commission and developers, listening and incorporating their feedback." ®

https://www.theregister.com//2024/03/25/ec_antitrust_team_opens_dma/