Tech Stock Selloff: EU Holds Giants Under Siege

US Tech Giants under Siege as EU Digital Market Act Looms

Microsoft and Apple stock plunged amid reports they face fresh investigations from the European Union regulators. The new probe pertains to a new digital markets clampdown that target’s close to 22 services offered by some of the biggest tech giants. Google, Amazon, and Meta are the other tech giants targeted as part of the new Digital Markets Act poised to come into effect early next year.

EU Digital Markets Act

Under the new act, it will be illegal for tech giants to favor their own services over those of rivals. Additionally, the companies will be prohibited from combining personal data across different services or using data they collect from third-party merchants to compete against their rivals. In addition, the companies will have to allow users to download apps from rival platforms, which takes a significant swipe on Apple’s iOS platform.

Under the new obligations, Apple will have to open up its ecosystem to allow iPhone and iPad users to download apps from rival app stores. Apple has already downplayed the push, insisting that such actions will pose significant privacy issues and data risks.

Tech Giants Targeted

Meta is another tech giant targeted by the new EU Digital Markets Act, as it will be prohibited from combining user data between Facebook and Instagram or its other apps without seeking permission. Amazon is another company targeted by the new act, as it will be barred from using data it collects from sellers on its platform to create products that compete against them.

Alphabet’s Google also finds itself at a crossroads with the EU regulators as it will be barred from favoring its own search verticals like shopping in its search results. Microsoft has sought to defend itself from the new act, insisting that its search engine, Bing, is too small compared to Google and thus should be exempted.

Antitrust Pressure

The new rules should pile antitrust pressure on US tech giants that have had to pay billions of dollars in the past in fines and tax orders from the watchdog. The EU antitrust body insists that the new act is necessary to clamp down on the monopolistic plays by the big tech giants. The EU internal market commissioner, Thierry Breton, expects the new act to reign on the tech giants’ economic power and create more choice for consumers while creating new opportunities.

Companies that violate the new DMA act stand to incur fines of as much as 10% of their worldwide annual sales. It could also rise to 20% in the event of continued infringement. The EU commissions could also demand the companies to be broken up in case of systemic violations.

The affected companies have six months to fall in line and ensure their products and services abide by the new rules. Companies that feel aggrieved have a right to challenge the new regulations in court. The EU antitrust body expects the tech giants to go to court, as has been the case in the past.

Big technology companies have dominated the digital economy over the years owing to their ability to challenge any form of government oversight. Despite facing the risk of billions of dollars in fines, the companies have continued to propagate their monopolistic behavior, something that allows them to generate billions of dollars in revenues and earnings.

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