The European Commission has issued preliminary findings against Alphabet Inc., accusing the tech giant of breaching the Digital Markets Act (DMA) in two key areas, Google Search and Google Play.
The Commission in a press release contends that Alphabet unfairly prioritizes its services in search results and restricts app developers from directing consumers to alternative purchasing options.
According to the Commission, Alphabet’s practices violate the DMA’s requirement for fair and non-discriminatory ranking. The preliminary findings outline specific concerns:
“Alphabet treats its own services, such as shopping, hotel booking, transport, or financial and sports results, more favourably in Google Search results than similar services offered by third parties.”
“More specifically, Alphabet gives its own services more prominent treatment compared to others by displaying them at the top of Google Search results or on dedicated spaces, with enhanced visual formats and filtering mechanisms.”
Concerns over Google Play Store practices
The Commission also raised concerns regarding Alphabet’s practices within its Google Play app marketplace. Under the DMA, app developers must be allowed to freely inform consumers about alternative, potentially cheaper purchasing options.
However, the Commission’s findings indicate that Alphabet restricts this process through technical barriers and excessive fees.
Observations from the preliminary findings include:
“Alphabet technically prevents certain aspects of steering, for instance, by preventing app developers from steering customers to the offers and distribution channels of their choice.”
“Whilst Alphabet can receive a fee for facilitating the initial acquisition of a new customer by an app developer via Google Play, the fees charged by Alphabet go beyond what is justified.
For example, Alphabet charges developers a high fee over an unduly long period of time for every purchase of digital goods and services.”
Regulatory response and next steps
The European Commission’s issuance of preliminary findings signals that Alphabet is under scrutiny for potential non-compliance with the DMA. However, this stage of the investigation does not constitute a final ruling.
Alphabet now has the opportunity to respond by examining the Commission’s investigation file and submitting a written defense. If the preliminary findings are confirmed, the Commission may issue a non-compliance decision, which could lead to financial penalties or regulatory enforcement actions.
What you should know
The DMA is designed to ensure fair competition in the digital sector by regulating large platforms, known as gatekeepers, that control significant access between businesses and consumers.
- Alphabet was officially designated as a gatekeeper for Google Search and Google Play on September 5, 2023, due to its market dominance in these areas. A key feature of the DMA is its requirement for services like WhatsApp and Messenger to be interoperable with rival platforms, allowing smaller competitors access to these dominant networks.
- Additionally, the law bans practices such as Apple preventing third-party app stores on iOS and Amazon from using competitor data for its own retail strategies. The goal is to reduce Big Tech’s market grip by fostering more competition and consumer choice.
The European Commission has centralized enforcement, ensuring compliance with potential fines of up to 10% of a company’s global annual turnover, or 20% for repeat violations.
