EU targets Google, Apple under DMA, risking clash with Trump
What's the story
The European Commission has accused tech giants Google and Apple of breaching its digital rules. The move could escalate US-EU tensions as Donald Trump urges the bloc to soften its stance on American tech firms, warning of possible retaliatory tariffs. The Commission's enforcement action against Alphabet Inc., Google's parent company, and Apple comes in response to alleged violations of the EU Digital Markets Act (DMA). The DMA is a set of rules to ensure fair competition in EU's digital market.
Accusations
Allegations against Google and Apple
The European Commission accused Google of prioritizing its own services in search results, ahead of competitors. This is viewed as a breach of the DMA's mandate of "transparent, fair and non-discriminatory" treatment of third-party services. The Commission also claims that Google's Play Store prevents developers from steering consumers toward other channels where better offers might be available. Apple, meanwhile, is accused of not making its operating systems available to devices made by competitors, such as smartphones and wireless headphones.
Financial implications
Potential fines for non-compliance
The DMA violations could lead to hefty fines for Google and Apple. Companies found guilty of breaching the DMA are penalized up to 10% of their global revenue, which could go as high as 20% for repeat offenses. If we consider Apple's projected $391 billion revenue in 2024, it could be fined nearly $80 billion. Google also risks the same based on its earnings, with a potential maximum fine of $35 billion based on Alphabet's $350 billion revenue in 2024.
Compliance requirements
EU's directives to Apple
The European Commission has ordered Apple to make its operating systems available to devices made by competitors. The move is aimed at promoting competition by allowing the products of rival tech companies to connect with Apple's devices. The Commission also gave a detailed timeline and methodology of how Apple should respond to requests from app developers seeking system access. Non-compliance could lead to further probes and fines against the company.
Company statements
Responses from Apple and Google
Apple, too, expressed concern over the EU's decisions, saying they "wrap us in red tape" and slow down its ability to innovate for European users. The company stressed that these regulations could negatively impact their products and users. Google also responded to the allegations, saying the Commission's findings require them to make more changes in how they display certain search results. They warned this could make it harder for people to find what they're looking for.