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Google search, Play Store falling foul of Digital Markets Act rules, says EU

  • 19.03.2025 17:36
  • msn.com
  • Keywords: Google, EU

Google Search and Play Store face EU DMA violations for self-preferencing in search results and restricting app developer steering options. The EU suspects Alphabet of unfairly promoting its services over rivals and charging excessive fees, potentially leading to fines up to 10% of global turnover. Google may respond, but compliance remains uncertain as the investigation continues.

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Estimated market influence

Alphabet

Alphabet

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Analyst rating: Buy

Alphabet is suspected of breaching the DMA by favoring its own services in Google Search and Play Store.

Google

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Google's Search and Play Store are under investigation for potential DMA violations.

Context

Analysis of Google's Potential Violation of the Digital Markets Act (DMA)

Overview

  • Google Search and Play Store suspected of breaching EU’s DMA.
  • Preliminary findings announced by EU Commission enforcers on November 29, 2023.
  • Alphabet (Google’s parent company) is among the tech giants regulated under DMA.

Key Findings

1. Google Search Allegations

  • Issue: Suspected of self-preferencing in search results.
  • Details:
    • Alphabet treats its own services (e.g., shopping, hotel booking, transport, sports results) more favorably than third-party services.
    • Practices include displaying own services at the top of search results or in dedicated spaces with enhanced visual formats and filtering mechanisms.

2. Play Store Allegations

  • Issue: Suspected of restricting app developers' ability to direct users to alternative channels for better offers.
  • Details:
    • Alphabet prevents app developers from steering customers to external offers.
    • Charging high fees for purchases, extending beyond what is justified.
    • Fees are charged over an unduly long period for digital goods and services.

Penalties

  • Confirmed violations can result in fines of up to 10% of global annual turnover.
  • Non-compliance may lead to additional enforcement actions.

Market Implications

1. Competitive Dynamics

  • Precedent Set: Follows EU’s actions against Apple, which was fined €1.84 billion for DMA violations in the music streaming market.
  • Regulatory Trend: Indicates a stricter regulatory environment for tech giants under DMA.
  • Impact on Innovation: May encourage smaller competitors by reducing dominance of major platforms.

2. Industry-Wide Effects

  • Pressure on Compliance: Tech companies are now more incentivized to review their business practices to align with DMA rules.
  • Potential Reforms: Could lead to broader changes in how search engines and app stores operate across the EU.

Strategic Considerations

1. Google’s Response

  • Alphabet has made changes post-DMA enforcement but deemed insufficient by the EU.
  • Aggregation and search sites claim Google is circumventing DMA rules through new tactics.

2. Regulatory Focus

  • Teresa Ribera, EU Competition EVP, emphasized creating a culture of compliance with DMA.
  • The EU will consider Google’s defense before finalizing its decision.

Long-Term Effects

1. Financial Impact

  • Potential fines could significantly impact Alphabet’s financials, given its massive global turnover.
  • Reputational damage may also affect consumer trust and partnerships.

2. Market Structure

  • Could lead to a more level playing field for competitors in search and app distribution.
  • May encourage alternative platforms to innovate and grow without Google’s dominance hindering progress.

Next Steps

1. Investigation Outcome

  • Google will have an opportunity to respond to the EU’s findings.
  • Final decision on compliance and penalties is pending further review.

2. Regulatory Dialogue

  • The EU may engage in dialogue with other tech companies to ensure adherence to DMA rules.
  • Potential for broader regulatory scrutiny across the tech sector.

Conclusion

The EU’s preliminary findings against Google highlight the growing emphasis on enforcing competition laws in digital markets. If confirmed, these violations could set a significant precedent for regulating tech giants and fostering fairer market dynamics. The outcome will have far-reaching implications for Alphabet, its competitors, and the broader tech industry.