Google, Apple hit by EU regulatory crackdown

By Foo Yun Chee

BRUSSELS (Reuters) -Google was hit with two charges of breaching landmark EU rules on Wednesday, while Apple was ordered to help rivals connect with its iPhones and iPads, as Europe's antitrust regulators continued a crackdown against Big Tech.

The move by the European Commission came despite threats from U.S. President Donald Trump to levy tariffs against countries which impose fines on U.S. companies.

Both Google and Apple have been in the European Commission's crosshairs since March last year over concerns that they may not be complying with the Digital Markets Act, which aims to rein in the power of Big Tech via a list of do's and don'ts.

The EU competition watchdog on Wednesday issued preliminary findings charging Google with DMA violations in both areas, confirming a Reuters story from February 21.

The Google case centred on whether it restricts app developers from informing users about offers outside its app store Google Play, and whether it favours its associated search services such as Google Flights in Google Search.

The Commission also issued two orders to Apple to open up its ecosystem to rivals, six months after it began so-called specification proceedings against the iPhone maker.

The first charge in the Google case focused on the company's practices on its app store Google Play. Alphabet technically prevents app developers from freely steering consumers to other channels for better offers, regulators said.

A service fee charged by the company for facilitating an app developer's initial acquisition of a new customer via Google Play goes beyond what is justified, they added.

In the second charge, regulators said Google favoured its own services such as Google Shopping, Google Hotels and Google Flights over rivals.

EU antitrust chief Teresa Ribera said in a statement that the measures "ensure that Alphabet abides by EU rules when it comes to two services widely used by businesses and consumers across the EU, Google Search and Android phones".

Google pushed back, saying that EU competition rules are hurting consumers and businesses.

"The Commission's findings require us to make even more changes to how we show certain types of Search results, which would make it harder for people to find what they are looking for and reduce traffic to European businesses," Oliver Bethell, Google's senior director for competition, said in a blogpost.

If the company cannot charge reasonable fees to support the ongoing development of Android and the Play services, it cannot invest in an open platform, he said.

The first EU order against Apple requires the company to give rival makers of smartphones, headphones and virtual reality headsets access to its technology and mobile operating system so they can connect with iPhones and iPads seamlessly.

The second sets out a timeline for Apple to respond to requests from app developers for its systems to be interoperable with others.

Apple said the EU order would hurt users and help its rivals.

"Today's decisions wrap us in red tape, slowing down Apple's ability to innovate for users in Europe and forcing us to give away our new features for free to companies who don't have to play by the same rules," the company said in an email.

"It's bad for our products and for our European users. We will continue to work with the European Commission to help them understand our concerns on behalf of our users," it added.

Google, which has been fined more than 8 billion euros ($8.7 billion) by the EU in the last decades for various antitrust violations, risks fines of up to 10% of its global annual sales if found guilty of breaching the DMA.

Apple could face an investigation and potential fine if it fails to comply with Wednesday's order.

Alphabet shares were up 1% at 1540 GMT. Apple shares were up 1.6%.

($1 = 0.9163 euros)

(Reporting by Foo Yun Chee; Editing by Sudip Kar-Gupta, Matt Scuffham and Jan Harvey)