Yahoo Finance Government scrutiny of Big Tech intensifies on both sides of the Atlantic
The EU outlined which tech giants have to comply with tougher rules while US regulators prepare for a series of new legal battles.
Pressure on the world's biggest tech giants is intensifying this month on both sides of the Atlantic.
The European Union’s antitrust authority on Wednesday released a list of six Big Tech "gatekeeper" companies that it says will need to operate under new rules designed to limit their power.
Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), ByteDance, Meta (META), Microsoft (MSFT), and 22 of their "core platform services" must comply with the Digital Markets Act, a law passed in 2022 to promote competition.
The rules, which are enforceable starting in March, outline how technology companies should operate and establish penalties if they don't comply. That includes fines or a possible company breakup.
Scrutiny is also rising in the US, where regulators are preparing this month to file a new suit against Amazon after a meeting with the company last month failed to solve their differences, according to new reports from Bloomberg and The Wall Street Journal.
The legal action from the Federal Trade Commission would reportedly target concerns the e-commerce giant is unfairly competing with third-party sellers who use its marketplace.
The Department of Justice and a collection of state attorneys general are also suing Google in two consolidated cases launched during President Trump’s administration, alleging the company abuses its market power across search and search advertising to squeeze competition.
Those cases go to trial starting Tuesday before the US District Court for the District of Columbia, which has dismissed some of the claims.
Revenue risks
A Google executive said Wednesday in a blog post that the new rules from the EU will require Google to make changes to the way its products and services work.
"For us, for example, that will mean building on the work we have done to provide consumers with information and opportunities to switch platforms or manage their data ... and remind people about their choices," Google's legal director Oliver Bethell said.
The DMA purports to promote competition by scaling back tech companies’ ability to control gateways through which business users reach their final consumers.
Messaging apps like WhatsApp, for example, must interoperate with other messaging services, meaning that messages must be capable of being sent from WhatsApp to another messaging application.
Companies subject to the law also can no longer favor their own products or services over the services of competing businesses that use their platforms. Amazon.com, for example, is prohibited from preferencing its brand name products over the products of its third-party sellers.
The DMA further prohibits gatekeeper designees from locking users into their own ecosystems. For instance, Google must open its Play Store and Apple must open its App Store to other app stores that want to compete in the market. The mobile device manufacturers are also prohibited from dictating what apps must come on their devices, pre-installed.
"They're all going to face risk to their revenue streams for sure if they're on that list," Case Western Reserve University Law School professor Anat Alon-Beck told Yahoo Finance.
The DMA is enforceable in the EU starting in March. Its rules carve out special restrictions for dominant technology companies that have a market cap of at least 75 billion euros ($80.5 billion), and earned at least 7.5 billion euros ($8 billion) in revenue in each of the past three years.
An exception can be made for companies that have an "entrenched and durable" market position.
Penalties for violations of the DMA are steep. Gatekeepers that fail to comply with its obligation face fines up to 10% of the company's annual worldwide revenue, and up to 20% for repeat offenses. Other systematic infringements can empower the EC to seek divestment or block future acquisitions.
The full list of Big Tech services that the EC says fall under the law’s purview includes Meta's Facebook, Instagram, and WhatsApp; Apple's iOS and Safari; Alphabet's Android operating system, Google Search, YouTube, and its app store, advertising, and map services; Amazon's marketplace and advertising services; Microsoft's Windows operating system and LinkedIn; plus ByteDance's TikTok.
The EC said it separately opened market investigations to assess Microsoft’s claims that its Bing search engine, Edge browser, and Microsoft Advertising arm should be exempt from gatekeeper status. The commission is also investigating Apple's claims that its iMessenger service should be exempt.
Alon-Beck with Case Western Reserve said Apple's and Microsoft's objections to gatekeeper status for their respective iMessage and Bing services hold merit.
"I kind of agree with Microsoft and Apple, that [regulators] will be harming ... overall competition if they add them, because really, Google doesn't have competition," she said.
Amazon said in a statement that it is "committed to delivering services that meet our customers’ requirements within Europe’s evolving regulatory landscape" and that "we will continue to work constructively with the European Commission as we finalize our implementation plans."
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Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
