Big Tech faces its biggest challenge in decades, with antitrust regulators on both sides of the Atlantic cracking down on alleged anticompetitive conduct, with industry-first penalties against Apple and Alphabet Inc.'s Google. May lead to split orders.
This could lead to even stronger action by watchdogs around the world, as evidenced by the increase in antitrust investigations in countries following the launch of EU and US cases. No company has ever faced the possibility of a regulator-driven breakup in the United States since AT&T was broken up just 40 years ago.
Google said it disagreed with the EU's accusations, while Apple said the US lawsuit was wrong on the facts and law.
In 1984, AT&T, also known as Ma Bell, was split into seven independent companies called “Baby Bells” to establish one of the most powerful monopolies of the 20th century. AT&T, Verizon, and Lumen are the only remaining companies.
Regulators now claim that companies like Apple and Google have built impenetrable ecosystems around their products, making it difficult for customers to switch to competing services, leading to “walled” It is said that this led to the coining of the word “garden.”
The U.S. Department of Justice on Wednesday offered relief to the $2.7 trillion company Apple to restore competition after it joined 15 states in suing the iPhone maker, accusing it of monopolizing the smartphone market and thwarting rivals. He also warned that a partition order would not be ruled out as a strategy. and soaring prices.
Still, the case, which Apple has vowed to fight, will likely take years to be decided.
The US action comes on the heels of other growing threats across Europe this week.
Big tech companies will soon face more scrutiny, with Apple, Metaplatform and Alphabet likely to be investigated for breaches of the Digital Markets Act (DMA), with repeated violations facing steep fines and penalties. That could lead to a partition order, people with direct knowledge of the matter said. EU antitrust chief Margrethe Vestager last year accused Google of anticompetitive practices in its money-spinning ad tech business and said it may have to let go of the sale, paving the way for drastic measures. contributed to. -Side tool.
He said requiring Google to sell some of its assets appears to be the only way to avoid a conflict of interest. That would prevent Google from allegedly favoring advertisers and online publishers with its online digital advertising technology services.
Vestager expects to make a final decision by the end of the year.
Andreas Schwab, a member of the European Parliament who was heavily involved in drafting the landmark EU DMA technology regulations that came into force this month, said lawmakers want bold action against big tech companies that flout the rules. . Congress will require it. dissolution. “The ultimate goal is to make the market open and fair, allowing for more innovation,” he said on Friday.
It's hard to break up
It is unclear whether regulators will issue a dissolution order as they consider their options, and any action could only result in fines. Legal experts also suggested that the case against Apple, which followed the 1998 case against Microsoft, could be more difficult this time around.
“In the European Union, there is not much of a tradition and demerger is seen as a last resort. Something like this has never happened before,” said a commission official, speaking on condition of anonymity.
Damien Geradin, a lawyer at Geradin Partners who has advised several app developers in other lawsuits against Apple, said Apple's highly integrated system would also make it harder to break up compared to Google.
“It seems much more complicated to me. You're talking about something integrated. You can't force Apple to sell the App Store, for example. That doesn't make sense,” he said. . He said it would be better to impose behavioral remedies that require Apple to do certain things, while Google could issue a breakup order for acquisitions that simply enhance its core services.
Max von Thun, director of the advocacy group Open Market, said: “The Department of Justice is likely to take remedies such as opening up hardware features and ensuring that developers are not discriminated against on price.'' ” he said.
“I think they want to say everything is on the table, but that doesn't necessarily mean they'll choose that path,” he said.
Apple derives most of its roughly $400 billion annual revenue from selling hardware such as iPhones, Macs, iPads, and watches, followed by its services business, which brings in about $100 billion annually.
Structural remedies such as separation will ultimately be tested in court, said Assimakis Komuninos, a partner at law firm White & Case.
“I can say that there are not many experiences in which structural measures such as dissolution have been imposed, but the small amount of experience in the past shows that, apart from legal difficulties, this is extremely difficult,” he said.
