According to early findings issued by EU Commission officials on Wednesday, Google Search and its Play Store app marketplace possibly offended the Digital Markets Act (DMA) of the European Union. The months-long inspection focuses at whether Google’s actions correspond to the DMA, a foundational rule designed to support level competition and market competition in the digital space.
Main Outcomes of the Research:
- Aiming for Tech Giants: Only a few major tech companies are included by the DMA, including Alphabet, the parent company of Google.
- Timeline: Immediately after the DMA came into operation in March 2024, the EU started looking into Google’s company activities.
- Expected Fines: Google can be charged up to 10% of its annually worldwide revenues if infractions are demonstrated, reflecting the importance of the case.
- Major Regions: Two main regions are the focus of the EU’s preliminary outcomes:
- Google Searches: Prosecutors claim that Google may be engaging in an approach known as self-preferencing, when it elevates its own offerings over those of opponents. The DMA explicitly forbids such behavior to ensure equal competition for all market consumers.
- Play Store: The EU is looking into whether Google’s actions in its app marketplace adhere to DMA requirements, however specifics are still being examined into.
- Initial Nature: Google will get an opportunity to respond to the allegations, and the results are not finalized.
- Relevant Precedent: How the DMA is interpreted by major tech platforms to come may be greatly affected by the outcome in this case.
The inquiry reflects the EU’s commitment to maintaining the DMA and assuring balanced competition in the online marketplace. The stakes are high for Google because proven offenses might lead to large penalties and affect the company’s activities in the region.
“Alphabet treats its own services, such as shopping, hotel booking, transport, or financial and sports results, more favorably in Google Search results than similar services offered by third parties,”
The EU wrote in a Press Release.
More specifically, Alphabet gives its own services more prominent treatment compared to others by displaying them at the top of Google Search results or on dedicated spaces, with enhanced visual formats and filtering mechanisms.
Google’s Play Store, a marketplace for mobile applications, is the focus of another area of concern. By limiting app builders from actively directing clients to various networks or platforms that are not under Google’s control in which consumers might be enabled to find lower prices or offerings, the EU thinks that Google may be violating the DMA. This method could limit customer choice and competitors, which is opposite to the DMA’s goals of maintaining an open and balanced digital market.
The Commission wrote
“Alphabet technically prevents certain aspects of steering, for instance, by preventing app developers from steering customers to the offers and distribution channels of their choice,”
Whilst Alphabet can receive a fee for facilitating the initial acquisition of a new customer by an app developer via Google Play, the fees charged by Alphabet go beyond what is justified. For example, Alphabet charges developers a high fee over an unduly long period of time for every purchase of digital goods and services.
Apple’s Recent Affair with EU Laws:
Targeting major IT companies for unfair competition is not unusual for the European Union. After an extended look into the iPhone manufacturer’s actions in the iOS streaming music market, the EU fined Apple €1.84 billion a year ago. The claims of discriminatory steering constraints that prevented innovation and customer choice were at the center of this case, which came under the Digital Markets Act (DMA).
Initial Results Compared to Apple’s App Store:
The EU also issued its preliminary results against Apple’s App Store last summer, claiming that it violates DMA guidelines. These findings brought to light difficulties like those now being stated over Google, mainly those concerning restraints that limit publishers from freely referring users to other platforms or offers.
EU Initial Findings Regarding Google:
Google’s efforts to conform to the Digital Markets Act (DMA) have drawn condemnation from the European Commission for failing to meet the necessary standards. The European Commission feels that even though the firm has made several kinds of changes to its search engine and Play Store services within the EU, these changes fall short of meeting DMA’s standards.
Official Statement from the EU
Teresa Ribera, the Commission’s Executive Vice President for competition matters, stated:
- Our preliminary findings aim to ensure Alphabet complies with EU rules for widely used services like Google Search and Android phones.
- We believe Alphabet is favoring its own products in search results, undermining fair competition. Additionally, Android users are not effectively informed about cheaper offers outside the Play Store.
- Our focus is on fostering compliance with the DMA. Non-compliance proceedings are a last resort, but we will enforce the law fairly and respect the rights of defense.
Google’s Response
When asked about potential changes to its EU operations following the findings, Google did not directly address the question. Instead, the company referred to a blog post published alongside the EU’s announcement. In the post, Google argued that the EU’s demands would harm consumers, businesses, and innovation.
Oliver Bethell, Google’s Senior Director of Competition, claimed:
- The required changes to search for results would make it harder for users to find relevant information and reduce traffic to European businesses.
- Alterations to the Play Store would expose users to malware and fraud, forcing Google to choose between a closed, secure model and an open but unsafe one.
- Charging reasonable fees is essential to support Android’s development and maintain an open platform that benefits users worldwide.
Bethell concluded,
“We will continue engaging with the Commission and comply with its rules, but today’s findings risk worsening the experience for Europeans.”
Viewpoint and Historical Perspective:
The EU’s broader endeavor to carry out the DMA and ensure equal play in the digital market comprises this investigation. Previous strategies include initial findings against Apple’s App Store last summer and a €1.84 billion punishment against Apple for anti-competitive practices in the music streaming sector.
The EU’s ongoing attempts to confront tech giants like Apple and Google illustrate its commitment to advancing equal rivalry and opposing monopolistic practices. But Google’s allegation that stricter rules could hinder innovation and harm users emphasizes the costly line that regulators have to define between innovation and competition.
