The European Commission has opened non-compliance investigations under the new Digital Markets Act into tech companies Meta Platforms (META), Apple (AAPL), and Alphabet (GOOG, GOOGL). The inquiry focuses on Apple and Google’s anti-competitive steering practices and Meta’s “pay or consent” advertising model.
Yahoo Finance Anchors Brad Smith and Seana Smith break down the details of the investigations and the market implications for the companies.
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Editor’s note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: Another big news item coming ahead of the opening bell, another crackdown on big tech this time coming from the EU. The commission going after Meta, Alphabet, and Apple. The statement says the EU has opened noncompliance investigations under the Digital Markets Act into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search. Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s is for pay or consent models.
So let’s just break that down a little bit further here. So for Alphabet and Apple steering rules, what they say is that the commission has opened proceedings to assess whether the measures that have been implemented by Alphabet and Apple in relation to their obligations pertaining to app stores are in breach of the Digital Markets Act requiring gatekeepers to allow app developers to steer consumers to offers outside of the app stores free of charge there.
And that’s something that’s come up time and time again. And really, has been kicked off by some of the companies who were calling about this for years and saying, hey, can you guys look into this? They’re taking revenues from us or just barring us from the opportunity to realize revenue because of that steering that’s taken place.
SEANA SMITH: Yeah. And the impact that this could potentially have on the bottom line, just putting this in perspective in terms of what this means for Apple’s business, the EU accounts for about 7% of App Store revenues. So it is a significant part of their business. And then, of course, the question is, if this happens over in the EU, what exactly will more of that pressure look like here in the US?
We had the DOJ lawsuit separate issue, obviously. But the DOJ lawsuit, yes, last week– excuse me– pertaining to Apple and some of the concerns there over the monopoly. But then if you move that aside and move also the issues with Alphabet aside, similar sort of scenario there just in terms of their questions about Google Play. But then focus on Meta and what the argument is there.
Because that’s something that also stuck out to me. You have this pay and consent model, which is looking at the ad subscription model versus whether or not you’re going to opt in and let meta share your data. So very separate issues here, but there is pressure across the board on these stocks here in the premarket. You’ve got Apple down another 1% potentially.
