EU Preliminary Findings Against Apple and Alphabet Under Digital Markets Act

Action: The European Commission sent a set of preliminarily findings, an important step in a case under EU law, to Apple and Google claiming likely violations of the European Union’s Digital Markets Act. If the European Commission brings a formal case and is victorious, this could result in fines of up to 10% of global turnover (a definition of revenue used in EU competition cases) or 20% in case of a reoffense.

Key Insights

• The Digital Markets Act (DMA) is designed to limit the market power of designated “gatekeeper” platforms, large firms that have dominant positions in providing “core platform services,” such as search engines, app stores, and messenger services. The European Commission designated six gatekeepers – Alphabet (Google), Amazon, Apple, ByteDance, Meta, and Microsoft – and 22 services provided by those companies as subject to the law.
• Among other things, the DMA prohibits gatekeepers from self-preferencing their own products and services, mandates interoperability, and requires allowing third-party billing and app distribution.
• The Commission argues that “certain features and functionalities of Google Search treat Alphabet’s own services more favourably compared to rival ones, thus not ensuring the transparent, fair and non-discriminatory treatment of third-party services.” This includes more prominent treatment for Google services. The Commission also states that Google Play does not permit app developers to “freely steer[ ] consumers to other channels for better offers [.]”
• Both companies have the right to respond to the preliminary findings before the Commission makes a formal determination of non-compliance, and the Commission notes that it is continuing discussions with Google and Apple including specific steps to reach compliance under the Commission’s definitions. Each company has submitted compliance reports under the DMA.
• These actions come at a time when the Administration has stated that regulations “that dictate how American companies interact with consumers” in the EU, including the DMA and the Digital Services Act (which regulates large search engines, online intermediaries and marketplaces, and app stores) “will face scrutiny” and “violate American sovereignty.”
• The Administration has threatened retaliatory tariffs and other trade actions in response to actions that it views as foreign overreach against US companies.