Why in the news? 

The European Commission has initiated investigations into major tech companies like Apple, Meta, Google’s parent Alphabet, and Amazon to enforce fair and competitive markets in the digital industry, following the regulations of the Digital Markets Act (DMA).

Where is the context of these non-compliance investigations?

• Investigations into Tech Giants: Alphabet (Google), Apple, and Meta (formerly Facebook) are facing investigations over alleged violations related to unfair competitive practices.
• Specific Allegations: Alphabet is being investigated for steering customers towards its in-house services, Apple for similar practices in its App Store and Safari browser, Meta for its “pay or consent model.”

Steering rules are Non-Compliant:

• DMA Provisions: The Digital Markets Act (DMA) allows app developers to direct consumers to offers and services outside the gatekeeper’s app store without any charge.
• Commission’s Concerns: The European Commission expressed concerns about Alphabet (Google) and Apple’s noncompliance with DMA provisions, citing various restrictions and limitations imposed by these companies.
• Apple’s Defense: Apple defended its tight integration with the App Store, claiming it’s necessary for a secure and seamless user experience 

Present Challenges with Tech-giants:

• Alphabet engaging in self-preferencing:

• • Investigation on Google search: The Commission is investigating whether Google’s search results are discriminatory, particularly whether Google favors its own verticals over rival services, a practice known as self-preferencing 
  • U.S. Department of Justice’s Accusation: In October 2020, the U.S. Department of Justice (DoJ) accused Google of unlawfully maintaining monopolies in the search and search advertising markets through anti-competitive and exclusionary practices. 

• Apple enabling choice:
  • European Commission’s Investigation on IOS: The Commission is assessing whether Apple allows users to uninstall pre-installed or default software applications on iOS easily.  
  • Concerns Over User Choice: The investigation stems from concerns that Apple’s measures may prevent users from effectively exercising their choice of services within the Apple ecosystem.  

• Concerns about Meta’s model:
  • Meta’s Subscription Model: Meta (formerly Facebook) introduced a subscription model in the European Union (EU), European Economic Area (EEA), and Switzerland. This model offered users the choice to use Facebook and Instagram without ads by subscribing to a paid service.
  • Commission’s Concerns:  It expressed concerns that the binary choice offered by the model may not provide a real alternative for users who do not consent to personalized advertising. Consequently, the Commission doubted whether the model effectively prevented the accumulation of personal data by gatekeepers, as intended.

How will non-compliant companies be penalized?

• Potential Penalties: The companies under investigation face significant fines of up to 10% of their global turnover or 20% in the case of repeated infringements.
• Consequences of Systematic Infringement: If the investigation uncovers systematic infringement, the companies may be required to divest certain business units or sell parts of their business. Additionally, they could face a ban from acquiring related additional services.

Conclusion 

EU investigates tech giants like Apple, Meta, Alphabet, and Amazon for unfair practices under the Digital Markets Act. Concerns arise over violations, including self-preferencing and restricting user choice. Penalties may include hefty fines and divestments for non-compliance.

Mains PYQ

Q Elucidate the relationship between globalization and new technology in a world of scarce resources, with special reference to India. (UPSC IAS/2022)

Q  Examine the impact of liberalization on companies owned by Indians. Are they competing with the MNCs satisfactorily? Discuss. (UPSC IAS/2013)

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