In a significant move with potential implications for the Trump administration, the European Commission has unveiled major antitrust enforcement actions targeting Google and Apple. On Wednesday, the EU’s executive body indicated that Google parent company Alphabet likely breached the Digital Markets Act, a competition rulebook for large tech companies instituted a year ago, in several areas. Should these preliminary findings be finalized, Google may face fines up to 10% of its global annual revenue.
Additionally, the Commission directed Apple to adhere to the DMA mandates by ensuring that the iPhone can seamlessly operate with third-party devices, such as smartwatches, headphones, and TV sets. This marks the first instance where the Commission has imposed specific compliance measures on a company under this law.
Last month, President Donald Trump threatened to impose tariffs on entities that penalize or enforce tech rules against U.S. companies in ways perceived as discriminatory by his administration. Previously, the administration initiated a tariff dispute with Europe and globally regarding steel and aluminum imports and has also threatened tariffs on European alcohol.
Vice President JD Vance criticized European tech regulations, and companies like Meta and Apple have expressed their concerns to Trump about perceived targeting in Europe. Both Meta and Apple are facing separate EU antitrust decisions possibly as soon as this month.
The Commission’s preliminary findings regarding Alphabet’s DMA non-compliance address two long-standing issues. The first involves Google search results promoting its services, such as shopping and hotel booking, over those of competitors, often by placing them at the top or in prominent spaces. The EU had already fined Google $2.7 billion previously for similar practices. The second issue pertains to Google prohibiting developers on its Google Play platform from informing users about potential cheaper deals outside its platform, and charging excessive fees for attracting new customers. Google faced a $5 billion antitrust fine for Android-related abuses in 2018, but the current case specifically pertains to DMA rules.
Competition Commissioner Teresa Ribera stated that the preliminary findings aim to ensure Alphabet complies with EU regulations concerning widely utilized services like Google Search and Android phones.
Regarding Apple, the company will need to substantially modify its operations to adhere to the DMA. Apple has historically constrained competitor smartwatch manufacturers by not allowing users to reply to iPhone notifications on their devices. Now, Apple must address this restriction and enable easier pairing with third-party devices, including headphones and VR headsets. Additionally, developers will gain new opportunities for integrating file-sharing and streaming functionalities into their iPhone apps, and Apple will have to provide more transparent and timely information to developers seeking interoperability with iPhone and iPad.
Apple released a statement expressing concern that the Commission’s decisions impose burdensome regulations, stalling innovation and forcing Apple to provide its features free of charge to competitors. Google, on the other hand, argued that the Commission’s findings could hinder users’ ability to locate desired information and negatively impact European businesses.
Commission officials involved in announcing the decisions took care to assert that the measures were not unfairly targeting American companies. Although Apple claimed it was being singled out, Ribera emphasized the Commission was merely enforcing the law, and tech commissioner Henna Virkkunen highlighted the negative impact of Alphabet’s alleged misconduct on various businesses, regardless of their origin.
Despite these reassurances, a reaction from U.S. leadership is anticipated, particularly in light of Apple’s assertion that the new requirements compel it to relinquish its intellectual property to competitors. Furthermore, a recent memorandum by Trump stated that rules designed to transfer funds or intellectual property from American companies to foreign entities would activate U.S. tariffs.
This article was initially published on Fortune.com.
