san francisco With two new laws, the European Union wants to limit the power of large digital corporations such as Apple, Google or Facebook’s parent company Meta. However, several of these companies are preparing lawsuits to avert or mitigate the EU rules, as the Handelsblatt learned from corporate circles.
The law on digital markets (DMA) has just been finally signed. Starting next year, it will regulate how the market power of large platforms is to be limited and how competition is to be secured. The Digital Services Act (DSA) regulates content on platforms and is intended to work against hate speech, among other things. An exact date for the entry into force has not yet been set.
Apple and Google in particular had criticized the rules. Apple CEO Tim Cook had argued that some of the rules could endanger user security. So far, new applications can only be installed on Apple devices such as iPhones and iPads via Apple’s own “App Store”.
According to the rules of the DMA, Apple would also have to allow other ways. “In our view, that would destroy the security of iPhones,” Cook warned at the Vivatech conference in France in June.
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Meanwhile, lawyers have prepared procedures to legally challenge the new regulation in Europe. “Everything is ready. The boards only have to give their approval,” says the lawyer for a global tech company in Silicon Valley.
>> Read here: New EU internet rules: How Apple, Google and Amazon must change now
Of course, companies have legal recourse, says Gerard de Graaf, who heads the EU office in San Francisco, which opened in September. However, the laws are strictly checked and the EU is experienced in legal disputes.
“The EU Commission will defend the instrument and the legal basis on which it is based,” announced de Graaf in the event of lawsuits. Before setting up the EU representation in Silicon Valley, he was instrumental in preparing the DMA and DSA for the EU Commission.
In his more than three decades at the EU Commission, he was involved in the regulation of many areas. “I have never seen a case in which a regulation was not legally challenged,” says de Graaf. The EU Commission has an excellent legal department.
Years of litigation for billions
Between the years 2005 and 2010, the US group Microsoft had legally attacked almost every competition decision made by the EU Commission. “Then have Steve Ballmer and Bill Gates made the decision to follow guidelines and not always be in the crosshairs of the EU Commission.” There were still disputes between the EU Commission and Microsoft in the years that followed, but not like in the years before .
“We create the framework for companies,” says de Graaf. Whether there will later be alternatives to Apple’s “App Store” or other ways of loading applications onto iPhones or iPads is currently difficult to predict.
>> Read here: Microsoft is opening up to payments outside of its app stores
Although the EU Commission has won a few victories against US companies in court, it has also suffered defeats. A dispute with Apple was particularly explosive.
In 2016, the EU Commission decided that Apple would have to pay back taxes of 13 billion euros in Ireland. However, the European Court of Justice (ECJ) in Luxembourg annulled the Commission’s additional request in 2020. The commission appealed. A final decision is still pending.
Lobbying spending by US tech firms at record high
US technology companies are also trying other ways to influence their working conditions in Europe. Apple, Google parent Alphabet, Facebook parent Meta, Microsoft and Amazon all spent record amounts on lobbying over the past year, according to the EU’s Transparency Register.
Each of the companies increased spending on influencers in Brussels, according to the data. Together they spent around 27 million euros last year. Compared to the same period last year, Apple almost doubled its spending from 3.5 million euros to around 6.5 million euros.
The non-governmental organizations Corporate Europe Observatory and Global Witness published a report in which they trace the strategy of US tech companies based on documents from meetings of lobbyists with representatives from politics or EU institutions.
Accordingly, Google and Apple in particular are said to have tried to relax the digital laws and avert stricter regulation. The discussion phase for the DMA and DSA laws is over. Next, courts could deal with the details of interpretation.
Google implements the first rule as a precaution
The search engine operator Google had vehemently criticized the rules of the DMA. In July, however, the group gave in on a detail. Like Apple with the “App Store”, Google has also built a platform. With “Google Play” applications can be installed on end devices with the Google operating system Android.
Google is not as decisive as Apple against third-party providers and allows applications to be installed in other ways. However, like Apple, Google charges around 30 percent in fees for payments to major developers that are processed through the “Play” store.
Previously, a payment method from Google had to be used for this. The group is abolishing this practice in the EU. Other payment methods will also be permitted in the future. However, the announcement has a catch: Google is only reducing the fees by three percent.
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