EU’s crackdown on Apple, Meta and others is to avoid forced breakups, top official says

BRUSSELS — U.S. tech giants are facing stricter rules in Europe with more regulation announced this week, but one senior European Union official told CNBC the aim is to avoid forced breakups of large businesses.

The European Commission, the executive arm of the EU, named six “gatekeepers” on Wednesday — these are companies that have an annual turnover above 7.5 billion euros ($8 billion) or 45 million monthly active users inside the bloc. They are Amazon, Alphabet, Apple, Microsoft, Meta and ByteDance, who now have six months to comply with stricter market rules — such as not being able to prevent users from un-installing any pre-installed software or apps, or treating their own services more favorably.

“If these companies do not comply, and I hope that they will all comply, then we will have the ability to have [a] fine [of] up to 10% of the global revenue,” Thierry Breton, the EU’s commissioner for the Internal Market, told CNBC Wednesday.

The fine could be increased to 20% if the company in question continues to not comply with the rules.

“And if they continue, yes, we have tools, including to break up these companies, but I will never want to use it. And I can tell you the discussion that we have with all these companies are professional and I believe are going in the right decision,” Breton said.

Microsoft and Apple challenged the commission’s view that their services, Bing and iMessage, have to follow the new rules, known collectively as the EU’s Digital Markets Act. The commission started an investigation looking at these companies’ arguments and will decide within five months whether they are valid.

The European Union has stepped up its oversight of Big Tech players in recent years, and has been often criticized for being anti-American given that most of these companies are U.S.-based.

“I enjoy to be able to offer to successful companies, European or non-European, to have the ability to enter into our digital market, which is, by the way, bigger than the one in the United States. So it’s very attractive, we are happy that big non-European compan[ies] could benefit from it,” Breton said, who spoke exclusively with CNBC.

On top of the Digital Markets Act, the EU also introduced the Digital Services Act, which is focused on making platforms legally accountable for the content they carry. Failure to comply with the latter could also lead to hefty fines and temporary bans in the European market.

Some of the largest tech firms have undergone stress tests in the run-up to the implementation of the new law. For example, the stress test of the X social media platform, formerly known as Twitter, revealed that work still needs to be done to tackle illegal content and disinformation.

Amazon Marketplace, Apple AppStore, Instagram, TikTok and GoogleSearch are among the 19 platforms that fall under the tougher rules. More companies could be added to this list, including the likes of Netflix, PornHub and Airbnb.