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Global Antitrust Regulators Set Their Sights on Big Tech’s 'Walled Gardens'

Published March 25, 2024
2 months ago

The global technology industry is gearing up for a seismic shift as antitrust regulators intensify scrutiny over the dominant players in the market, notably Apple and Google. These tech giants are facing the prospects of a breakup for the first time since AT&T's dismantling 40 years ago due to allegations of building "walled gardens" around their services.

In a landmark move reminiscent of the breakup of AT&T's monopoly in the early 1980s, the U.S. Department of Justice has put Apple on notice, with a clear message that splitting up the $2.7 trillion behemoth is not off the table. Together with 15 states, the Department has sued Apple for monopolizing the smartphone market, obstructing competitors, and inflating prices for consumers. This suit heralds Apple's most significant legal challenge yet, signaling a new era of assertive regulation. However, Apple remains steadfast in its defense, ready to contest the allegations.

On another front, Google is confronting similar pressures from the European Union, where EU antitrust chief Margrethe Vestager has been a vocal critic of Google's adtech operations. Accusations of Google offering preferential treatment to its own advertising technologies have culminated in calls for the company to divest certain assets as a means to mitigate conflicts of interest. Such a decision from Vestager is anticipated to surface by the end of the current year.

Moreover, further legal threats loom large as regulators set their sights on the Digital Markets Act (DMA) violations, signaling that companies such as Apple, Meta Platforms, and Alphabet could soon come under fire. Breaching the DMA may not only incite substantial fines but also provoke breakup orders following repeated violations, creating a precarious situation for these tech leaders.

European Parliament lawmaker Andreas Schwab, an architect of the EU DMA tech rules, has communicated a clear expectation of bold measures against non-compliant Big Tech companies. With Parliament pushing for market openness and innovation, breakups of the industry's most formidable players are being contemplated as a means to induce compliance and fair competition in the digital marketplace.

Given this climate of heightened regulatory action, the technology sector and consumers worldwide are closely monitoring developments. The outcome of these legal battles will undoubtedly shape the future of the tech industry, influence consumer choices, and potentially redraw the boundaries of digital service provision.

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