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Categorized | Economy

EU to launch probe into US tech giants

Posted on April 30, 2015

This picture taken on May 13, 2013 in the French western city of Rennes shows a woman choosing Google Search (or Google Web Search) web search engine front page on her tablet. A report by a French expert panel published on May 13, 2013 recommended imposing taxes on smartphones and tablets but rejected a call for search engine Google to be charged for linking to media content. The nine-member panel, headed by respected journalist and businessman Pierre Lescure, said in the keenly awaited report that the revenue gained from the proposed new taxes could help fund artistic and creative ventures. AFP PHOTO / DAMIEN MEYER (Photo credit should read DAMIEN MEYER/AFP/Getty Images)©AFP

Brussels is set to widen its front against US tech companies just two weeks after the launch of its landmark competition case against Google by initiating a separate probe into a wider range of online platforms.

The move marks a first step towards tighter EU regulation of the internet and comes with the European Commission under pressure from France and Germany to take a tougher line on tech groups such as Amazon and Google.

    In a draft plan for a “digital single market” encompassing everything from online shopping to telecoms regulation, the commission said it would probe how online platforms list search results and how they use customer data. The latest draft of the plan, seen by the FT, will be approved by the commission next week.

    The plan could also bring in stricter rules for video-on-demand services such as Netflix and messaging apps like WhatsApp and Skype that have become big rivals to traditional European media and telecoms companies.

    Companies such as Airbnb and Uber are also likely to be roped into any investigation into platforms, which will aim to determine whether they are abusing their market power in the so-called “sharing economy”.

    The EU’s intensifying assault on big American tech groups has triggered accusations in the US, including from President Barack Obama, that the bloc is engaging in protectionism.

    The plan for a “comprehensive assessment” of online platforms comes after French and German ministers urged the EU to launch an investigation into the role played by the US internet giants.

    Earlier this week, the French economic minister Emmanuel Macron and German economic minister Sigmar Gabriel called for a “general regulatory framework for ‘essential digital platforms’” in a letter to the commissioner overseeing the reforms that was seen by the FT.

    They wrote: “We believe that the growing power of some digital platforms is a wider challenge that warrants a policy consultation with the aim of establishing an appropriate general regulatory framework for ‘essential digital platforms’.”

    The commission will start the probe “before the end of 2015”, according to the draft. It will look at the role of paid-for links and advertisements in search results, along with the ability of individuals and businesses to move from platform to platform.

    “Some online platforms have evolved to become players competing in many sectors of the economy and the way they use their market power raises a number of issues that warrant further analysis beyond the application of competition law in specific cases,” the 17-page document reads, in a clear reference to the Google antitrust case.

    Elsewhere in the draft, the commission said that it will “review” whether on-demand services such as Netflix should be subject to the same rules as traditional TV broadcasters. According to the document, on-demand services are sometimes “subject to lower obligations” than their television peers.

    We believe that the growing power of some digital platforms is a wider challenge that warrants a policy consultation’

    – French and German economic ministers

    Other measures to be proposed include plans to make it easier for small merchants in the EU to sell goods to customers in other countries. As part of the measures, ecommerce groups would be subject to their own national laws rather than the buyer’s as well as a set of EU-wide contractual rights. The commission will also crackdown on the opaque pricing structures used by parcel companies for deliveries between EU countries.

    The commission said it would launch long-awaited copyright reform before the end of this year, which will probably spark a tussle between large media groups, artists and producers as well as consumer groups.

    Brussels will aim to introduce the “full portability of legally acquired content” and allow “cross border access to legally purchased online services”. A crackdown on online piracy will focus on “commercial scale infringements”, rather than individual abuses.

    Finally, the commission will launch another attempt to reform telecoms regulation in the EU, to apply the same rules for traditional telecoms groups and internet rivals such as WhatsApp and Skype.

    Three fronts in the EU-US trade war

    Competition Tax Regulation
    Margrethe Vestager accuses Google of illegally using its dominance in online search to steer European consumers to its own in-house shopping services. The US search giant is also accused of forcing wireless companies into uncompetitive contracts to use its Android software. Apple, Starbucks and Amazon are all being investigated for artificially lowering their tax bills in EU member states. Apple potentially faces a bill for billions of euros for its tax arrangements with Ireland, while Luxembourg and the Netherlands are also part of the formal tax investigation. EU is preparing to investigate companies such as Google and Amazon over how they list their search results and use personal customer data. The investigation is part of a broader plan to create a “digital single market” in the EU and came after pressure from Germany and France for a probe.