Explainer-Why is the EU probing Big Tech under the Digital Markets Act?

FILE PHOTO: FILE PHOTO: A 3D printed Google logo is placed on the Apple Macbook in this illustration

By Martin Coulter

LONDON (Reuters) - The European Union on Monday launched investigations into Alphabet, Apple and Meta for potentially breaching a landmark new law designed to prevent Big Tech having an unfair advantage over competitors.

Last year, Brussels designated six companies as "gatekeepers" under the Digital Markets Act (DMA), meaning they were big and powerful enough to warrant extra regulation: Alphabet, Amazon, Apple, Meta, Microsoft and TikTok owner ByteDance.

They were given six months, until March 7, to comply with the rules, which aim to open up commonly used popular tech platforms and give users greater choice.

Violations could result in fines of as much as 10% of a company's global annual turnover. The EU Commission hopes to wrap up the probes within a year.

Below is a rundown on main areas of the investigation:

ANTI-STEERING:

Two of the five investigations relate to Alphabet and Apple's payment systems, specifically around "anti-steering" behaviour.

Whenever you make an in-app purchase on an iPhone or an Android device – such as ordering food for delivery or upgrading to the premium version of Strava – Apple or Alphabet will usually take a cut of the fee.

To get around this, app developers sometimes "steer" consumers towards their own websites, encouraging them to make payments to them directly so they can swerve the big tech companies' extra charges.

Apple has already been accused of anti-steering behaviour.

The EU fined the tech giant $2 billion earlier this month over claims it had blocked users of music streaming services from accessing discounts and promotions outside its own payments ecosystem. Brussels' move was cheered by Spotify, which has accused Apple of blocking rivals from sharing perks with their subscribers.

Beyond music streaming, the EU is now investigating whether Apple and Google have prevented even more consumers from accessing offers outside their control.

SELF-PREFERENCING:

In bricks-and-mortar retail, supermarkets sometimes sell cheaper own-brand alternatives on the shelves next to pricier goods.

That becomes more complicated with online marketplaces, where tech companies have been accused of displaying their own products more prominently than those of their rivals, giving themselves an unfair competitive edge.

Another of the EU's five investigations concerns whether Google prioritises its own services – such as Google Hotels or Google Flights – when users type queries into its search engine, potentially limiting business for rivals such as Booking.com or Skyscanner.

The EU said on Monday it was also looking into whether Amazon was giving preference to its own products in its online store over rivals, but stopped short of launching an investigation.

WHAT ELSE IS THE EU INVESTIGATING?

Under the DMA, Apple was supposed to make it easy for device users to uninstall software and change default settings, such as their go-to web browser or search engine.

The EU said it was concerned the company had not made such choice as easy as it should be for users, and would investigate.

The law also requires gatekeepers' platforms to gain explicit consent from users when they intend to combine a person's data across different platforms, such as Meta's Facebook and Instagram.

In an attempt to comply with the rules, Meta introduced a "pay or be tracked" policy, which would charge consumers who do not consent to their data being collected and combined like this 9.99 euros ($10.82) for ad-free versions of the apps.

Following questions over the subscription package's legality, Meta last week said it could reduce the fee to 5.99 euros.

On Monday, the EU said the binary choice does not amount to a real alternative for users, and it would investigate.

WHAT HAVE THE COMPANIES SAID?

Google, which made significant changes to its services ahead of the deadline, said it would defend its approach in the coming months. Apple said it was confident its plan complied with the DMA.

A Meta spokesperson said the company was trying to comply with the act's guidance.

"Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA," Meta said.

($1 = 0.9233 euros)

(Reporting by Martin Coulter; Editing by Catherine Evans)