The European Commission has intensified its regulatory pressure on tech giants with preliminary findings that Google has violated the Digital Markets Act (DMA). The charges specifically target Google's practices of prioritizing its own services in search results and restricting app developers from directing users to alternative distribution channels outside the Play Store.
EU's Preliminary Findings Against Google
The European Commission announced today that Google's parent company, Alphabet, is breaking European antitrust laws by favoring its own Shopping, Hotels, and Flights search services over competing providers. According to Teresa Ribera, European executive vice president for clean, just, and competitive transition, Alphabet is in breach of the Digital Markets Act by favouring its own products on the Google Search results page, which means suppliers and competitors do not benefit from fair ranking practices. This self-preferencing behavior has been a long-standing concern for European regulators, who previously fined Google €2.4 billion (approximately $2.5 billion) in 2017 for similar practices related to Google Shopping.
Play Store Anti-Steering Allegations
The second charge focuses on Google's Play Store policies. The Commission alleges that Alphabet does not effectively allow Android phone users to be told about or directed to cheaper offers from app developers outside the Google Play store. This practice, known as anti-steering, prevents developers from informing users about potentially less expensive options available outside Google's ecosystem. The EU also criticized Google's fee structure, stating that Alphabet charges developers a high fee over an unduly long period of time for every purchase of digital goods and services, which exceeds what is justified for facilitating customer acquisition.
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| This image showcases the rankings of apps in the Google Play Store, highlighting Google's ecosystem where concerns about app developer restrictions and user direction are being raised |
Google's Defense and Concerns
Google has strongly pushed back against these allegations. Oliver Bethell, Google's senior director of competition, argued in a blog post that the changes Europe is pushing for are misguided and would harm both businesses and consumers. Regarding search results, Google claims that removing direct links to services like airlines would lead to more expensive tickets because airlines have to pay commissions to intermediary websites. The company also reported that DMA-related changes have already caused traffic declines of up to 30% for some European businesses.
Security vs. Openness Dilemma
On the Play Store front, Google frames the Commission's findings as creating a false choice between openness and security. Bethell suggests that the EU is effectively forcing Google to choose between a closed model similar to Apple's iOS or an unsafe one where users might be exposed to scammy or malicious links outside the secure Play environment. This argument highlights the tension between regulatory demands for openness and the platform's responsibility to maintain security standards.
Potential Consequences and Broader Context
The stakes are significant for Google, as DMA violations can result in fines of up to 10% of a company's global annual revenue. For Alphabet, this could mean a maximum penalty of $35 billion based on its $350 billion revenue in 2024. Google now has the opportunity to challenge these preliminary charges or implement additional compliance changes before the EU reaches its final decision.
Growing Regulatory Pressure on Tech Giants
Google is not alone in facing DMA scrutiny. Apple became the first company charged under the act in June 2024, followed by Meta receiving a preliminary ruling that its advertising model also violates the legislation. These cases reflect Europe's broader push to regulate major tech platforms designated as gatekeepers under the DMA, which took effect for Alphabet in March 2024.
Political Dimensions and Transatlantic Tensions
The timing of these charges comes amid increasing tensions between European policymakers and the U.S. government. Reports suggest that U.S. pressure, particularly from the administration of President Donald Trump, who has aligned himself with American tech CEOs, may be influencing the EU's approach to big tech regulation. This geopolitical dimension adds another layer of complexity to the ongoing regulatory battles between Silicon Valley giants and European authorities.
Next Steps and Implications
As Henna Virkkunen, Europe's EVP for tech sovereignty, security, and democracy, emphasized, Ensuring that Alphabet fully complies with the DMA is key to ensure business and innovation opportunities for all providers of digital services. The outcome of this case will likely have far-reaching implications not only for Google's business model in Europe but also for the broader relationship between tech platforms and regulatory frameworks designed to ensure fair competition in the digital marketplace.