Google and Apple fight multiple antitrust probes, and it’s only the beginning – analysts

By Eric Johansson

Google and Apple are facing new antitrust probes on both sides of the Atlantic as regulators around the world attempt to reel in the power of Big Tech. However, market experts believe this is just the opening salvo.

It’s been an intense week for competition challenges: On Tuesday, the European Commission opened its latest investigation into Google. The probe’s key focus will be to determine if the Mountain View-headquartered company distorts competition by restricting access by third parties to user data for advertising purposes on websites and apps, while reserving such data for its own use.

“We are concerned that Google has made it harder for rival online advertising services to compete in the so-called adtech stack,” said Margrethe Vestager, executive vice-president at the European Commission. “A level playing field is of the essence for everyone in the supply chain. Fair competition is important – both for advertisers to reach consumers on publishers’ sites and for publishers to sell their space to advertisers, to generate revenues and funding for content.”

Vestager taking the lead in the investigation could be another point of concern for the Alphabet lawyers who remember that she was the one who led the investigation that slapped Google with a €4.3bn fine in 2018.

As a consequence of that fine, Google begrudgingly opened up Android phones earlier this month to competing search engines, enabling them to be the default search engine of choice. The announcement saw Google backpedal on its previous policy that forced rivals to pay via an auction for appearing on a choice screen on new European Android devices.

The new European Commission probe is the latest in a string of EU antitrust investigations launched this year that have targeted Google, Apple, Facebook and Amazon. But these processes are not the only ones. Nor is Google alone in being chomped at by competition watchdogs.

Just hours before the news broke that the EU had launched the new Google probe, the German antitrust regulator the Bundeskartellamt, or the Federal Cartel Office, launched an investigation against Apple to see if the iPhone maker is breaching the country’s new rules seeking to rein in the power of massive digital companies. The Bundeskartellamt has instigated similar investigations against Amazon, Google and Facebook since the start of the year.

The German and the EU’s antitrust probes against Google and Apple follow a smattering of stories where the Big Tech firms’ actions have backfired of late.

Earlier this month, France’s competition watchdog bit back against Google, accusing it of abusing its dominant position to choke rivals’ opportunities in much the same way the EU is now investigating. The regulator fined Google €220m in a landmark ruling. What’s particularly interesting with that case was that Google didn’t just pay to settle it, but also that Mountain View pledged to change its ways to ensure this wouldn’t happen again.

Across the pond, 10 US state attorneys accused Google in December last year of abusing its market dominance to overcharge publishers to display their ads.

And, if you ask market experts and analysts, these competition probes are only the beginning.

“We’ll definitely see more of them in the future,” Laura Petrone, senior analyst at GlobalData, tells Verdict.

The facts seem to back her up. Today, Reuters reported that a group of state attorneys may launch another case against Google, this time pertaining to whether or not it is violating antitrust laws on the Play Store. The suit is likely to be filed in Northern California, according to the news agency’s sources.

That would mean any potential trial would happen in the same battleground as where Epic and Apple clashed in May in a trial about whether the App Store choked competition in similar fashion. The combatants and the entire tech industry are eagerly awaiting the judge’s final verdict, a decision that could take months.

A Google spokesperson defended the Play Store, saying: “Android is the only major operating system that allows people to download apps from multiple app stores. In fact, most Android devices ship with two or more app stores preinstalled. They can also install additional app stores or apps directly from their browser if they choose.”

Apple famously do not allow for any apps to be installed on iPhones that aren’t available in its App Store. Cupertino has argued that so-called sideloading would open the floodgates to hack attacks and other cyber risks.

Petrone notes that lawmakers on both sides of the Atlantic have or are looking to introduce new regulations to restrict Silicon Valley’s anticompetitive behaviour.

“The EC’s proposed Digital Markets Act aims to constrain platforms so that they don’t become monopolies,” Petrone says. “This is increasingly viewed as a desirable solution by antitrust regulators worldwide and more recently the US House of Representatives has introduced five different bills seeking to tame the power of the world’s largest technology companies.

“As result of this new legislation enforcers would abandon lengthy proceedings against large platforms in favour of ensuring minimum conditions to avoid monopolies.”

The five bipartisan bills have been backed by the White House and the US House Judiciary Committee is set to vote on the package of antitrust bills later today.

Another case that may herald stricter scrutiny is the fact that the US senate has confirmed Lina Khan as the new chair of the Federal Trade Commission. She is expected to crack down hard on Silicon Valley behemoths, having investigated Amazon, Apple, Facebook and Google during her time as counsel to the US House Judiciary Committee’s subcommittee on antitrust.

Add to that the fact the G7 has agreed to introduce a new minimum global tax to make it harder for big businesses to dodge taxes and it certainly seems as if Silicon Valley is in for a reckoning.

But why, though?

There are several reasons why regulators around the world are increasingly putting Big Tech in their crosshairs.

“Covid-19 has seen people across the world becoming increasingly dependent on the services provided by online platforms, from ecommerce and social media to collaboration tools,” Petrone says. “Also these big tech companies are positioning themselves as the gateway through which users can access multiple services – blending social networking, ecommerce, and entertainment – often in a position of monopoly in each of these markets.

“At the same time the renewed antitrust action is the result of a long debate around existing competition law needs and how these need to be adapted to the challenges of the digital economy, where tech giants thrive thanks to their extensive, established customer networks and low-cost capital.”

One should not forget that the fallout of the Trump era has also motivated some of more conservative politicians to target Big Tech firms. Following the Capitol Hill riot on 6 January this year, social media platforms have taken off the gloves against politicians spreading fake news. When they don’t adhere to these platforms rules, they get banned in much the same way as the ex-President Donald Trump was.

Republican lawmakers have interpreted this as Silicon Valley trying to silence their voices, views that they have made known on TV shows, at congressional hearings, on the Senate floor and on the many other platforms available to them.

In retaliation, Republican lawmakers have pushed pedal to metal to ensure new laws are introduced to curtail the power of Big Tech and supported antitrust probes like the ones mentioned above.

Patrone and Verdict tech editor Eric Johansson, the author of this piece, will take part in an online panel on Wednesday June 30 to discuss together the tightening of regulators’ chokehold on Big Tech with key experts and market stakeholders.