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The EU this week accused Microsoft and Apple of stifling competition as Brussels steps up legal challenges against the world’s biggest tech groups.
European regulators hit Microsoft on Tuesday with antitrust allegations that the software giant is unfairly bundling Teams, its video conferencing app, with the Office suite, the first such attack on the company in more than a decade.
A day earlier, the European Commission, the EU’s executive arm, accused Apple of violating new “gatekeeper” rules by restricting how app developers can offer their customers within the App Store.
Why are these cases so big?
The EU’s push to bring the big tech companies to heel follows years of complaints from start-ups and activists that regulators are too slow to respond to the fast-growing sector and lack the legal tools to crack down on anti-competitive behaviour.
The commission has now started pushing the Digital Markets Act, a landmark law passed in 2022 that aims to open up markets for start-ups to thrive in the bloc.
The DMA gives the commission powers for so-called “ex-ante” regulation, which imposes requirements on Big Tech companies to operate their platforms fairly or face heavy fines.
“The new powers set the rules of the road in advance, whereas the old rules deal with any problems retrospectively,” said Alec Burnside, Brussels partner at law firm Dechert.
What sanctions can companies face?
The DMA stipulates that companies can face fines of up to 10 percent of their global revenue for initial violations. That penalty could be doubled to 20 percent for repeat offenders.
This would translate into billions of euros in fines. Apple’s $383 billion in revenue last year, for example, could result in a fine of up to $40 billion, while Microsoft’s $212 billion in revenue could lead to a potential $20 billion fine. However, such high penalties are rarely implemented in practice.
Technical groups have the option of trying to settle long-running cases by agreeing to change their procedures. Apple, for example, is close to reaching a deal with the EU over an antitrust investigation into its mobile payments system, people familiar with the matter said.
What is Big Tech’s answer?
The world’s biggest companies are expected to fight in EU courts in Luxembourg in the coming years, delaying the impact of Brussels’ enforcement efforts.
The tech industry will try to push the idea that regulation kills innovation. For example, Apple said last week that it was delaying the launch of AI features on its iPhones in Europe, blaming uncertainty caused by DMA about how it could combine its various services.
Who else is in Brussels’ firing line?
The EU cases against Microsoft and Apple are the latest in a series of ongoing battles between regulators and Big Tech. Several other investigations are underway.
The EU is investigating Facebook parent Meta for undermining competitors in classified advertising. It also accused Google of abusing its power in the ad tech industry. Both of these actions fall under traditional antitrust rules.
Separately, Brussels is also using the powers it gained with the new digital rules in a number of potential cases.
It launched proceedings against Alphabet over how it runs its own mobile app business. Concerns have also been raised that Google is “favoring” search by putting its own services, such as shopping results, ahead of competitors.
Meta is also under investigation by the DMA for its “pay or agree” model, which gives EU users the option to pay a subscription or agree to its data policy.
The cases show the EU is accepting any tool to prize open markets for tech start-ups, says a Brussels-based legal expert. “White cat, black cat, it doesn’t matter if it catches a mouse,” he said.