Google and Apple have both been issued with a slap on the wrist from the European Commission for failing to comply with the EU’s Digital Markets Act, which is designed to prevent tech giants from abusing their dominant positions in the industry.
Of the two decisions issued by the EU on Wednesday, the implications are more immediately worrisome for Google than Apple. The Commission issued preliminary findings following an investigation into whether Google Search favored promoting the company’s own services, such as shopping or travel, over rivals, and whether the Google Play Store prevents app developers from steering people to other channels in order to take advantage of better offers.
On both counts, the Commission said Google was failing to comply with the DMA, meaning it could be in line for a fine of up to 10% of its annual global turnover. “Both practices negatively impact many European and non-European businesses that rely on Google Search or Google Play to reach their users in the EU,” said Henna Virkkunen, the Commission’s EVP for tech sovereignty.
When it comes to Apple, the Commission issued guidance as to how it wants the company to make third-party products — smartwatches, for example — interoperable with iOS and iPadOS. The aim, it said, is to give people in Europe more choice of products they can buy that will be compatible with their iPhones and iPads.
“Effective interoperability for third-party connected devices is an important step towards opening Apple’s ecosystem,” said Teresa Ribera, the EU’s EVP for clean, just and competitive transition in a statement. “This will lead to a better choice for consumers in the fast-growing market for innovative connected devices.”
Transatlantic tensions
The debate over what’s best for consumers lies at the heart of the tussle between the US tech giants and the European DMA. The EU argues that more choice and interoperability will always be better, whereas Apple and Google argue that the rules pose risks to security and affordability in a way that will negatively affect the people who use their services.
In a blog post, Google outlined ways in which the EU’s decision will “hurt European businesses and consumers, hinder innovation, weaken security and degrade product quality.” It used the example of people ending up with more expensive airline tickets when it sends them through intermediary services rather than directly to airlines’ websites. The company also pointed out that by allowing app developers to direct people outside of their apps, Google cannot protect them from scammy or malicious links.
“Today’s decisions wrap us in red tape, slowing down Apple’s ability to innovate for users in Europe and forcing us to give away our new features for free to companies who don’t have to play by the same rules,” said the company in a statement. “It’s bad for our products and for our European users.”
It seems like transatlantic tensions are at “an all-time high” right now, with the Commission’s actions feeling “much bolder” than even six months ago, said Grace Nelson, analyst at Assembly Research.
“The preliminary findings on Google’s dominance, both in relation to Google Search and Google Play, are quite well aligned with the positions of regulators around the world, including with the US Federal Trade Commission as it pursues aggressive remedies in its suit against Google pending before the courts now,” she said.
Meanwhile, she added, over at Apple, the company has long argued that its “walled garden” approach to security is the best way to guarantee privacy and security for its users. “With the EU more focused on its global security and considering the importance of greater tech sovereignty, I can see how they’ve weighed interoperability and openness more importantly than a form of security that’s been entirely defined and controlled by a US-based firm.”
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