American Tech Giants Being Hit With Antitrust and Other Investigations in Europe

A commuter wearing Beats headphones in New York. European concerns focus on whether Apple may try to persuade labels to favor its new streaming service over those of rivals. (PHOTO CREDIT: Lucas Jackson/Reuters)
A commuter wearing Beats headphones in New York. European concerns focus on whether Apple may try to persuade labels to favor its new streaming service over those of rivals. (PHOTO CREDIT: Lucas Jackson/Reuters)

It is not a good week to be a giant American tech company in Europe.

The European antitrust investigation into Google appears to be heating up. More European countries are looking into Facebook’s privacy settings.

And Apple, which already is under scrutiny for its low corporate tax arrangements in Ireland, is now facing potential antitrust questions from the European Commission about the company’s new music streaming service expected this year.

The new developments offer the latest and perhaps clearest sign yet that American tech giants face intensifying scrutiny in Europe — pressure that could potentially curb their sizable profits in the region and affect how they operate around the world.

It is unclear what exactly set off the recent flurry of moves. But many local lawmakers have long been wary of the dominance of American tech companies, and those politicians have become increasingly outspoken about how the companies have used their financial deep pockets and ability to innovate quickly to outmuscle European rivals.

“It’s no wonder Europe is going after these companies,” said Luca Schiavoni, a regulatory analyst at the technology research company Ovum in London. “They are the biggest fish in the pond and have become very powerful. That inevitably means regulators are going to get involved.”

Europe’s willingness to police tech companies’ activities contrasts with a relatively hands-off approach favored by United States authorities, which have so far refrained from widespread antitrust lawsuits and privacy investigations into how tech companies use people’s online data.

In recent years, however, American tech companies have become the central target for Europe’s antitrust officials. Advocates say this approach is aimed at limiting the dominance of a small number of companies, though industry executives say Europe is using the investigations to promote the region’s own tech companies, which often have been unable to compete with their United States rivals.

On Thursday, Apple became the latest West Coast company to face this scrutiny after it was revealed that European competition officials had sent questionnaires to several music labels and rival music streaming companies, according to several people with direct knowledge of the interactions who spoke on the condition of anonymity.

The questions are part of attempts by European authorities to gather evidence to decide whether an official antitrust investigation into Apple’s new music service will be needed, the people added. News of the questionnaires sent to music industry executives was earlier reported by The New York Post.

An official investigation by the European Commission, the executive arm of the European Union, could lead to big fines against Apple and other restrictions on its activities if the company is found to have broken antitrust rules. In a previous antitrust case, for example, Microsoft agreed to pay fines totaling $1.8 billion for breaking European competition rules.

The most recent concerns focus on whether Apple, a crucial partner for the music industry, may try to persuade labels to favor its new paid streaming service over those of rivals like Spotify, which have free tiers, according to one executive at a major label, who declined to speak publicly.

Europe’s antitrust officials want to ensure that Apple’s new subscription service does not gain an unfair advantage over rivals like Spotify, the music executive added.

Representatives of Apple, the European Commission, Spotify and the major record companies all declined to comment.

Perhaps no company is in European regulators’ cross hairs more than Google, whose search engine holds roughly a 90 percent share of the region’s online search market.

As part of its five-year antitrust investigation into whether Google used its dominant position to favor its own services over rivals, the European Commission has now asked several companies that had filed complaints against the search giant to make their confidential submissions public, according to several people with direct knowledge of the matter who spoke on the condition of anonymity.

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SOURCE: NY Times, Mark Scott

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