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Google, Apple breakups on the agenda as global authorities pursue tech

A 3D printed Google logo is superimposed on the Apple Macbook in this picture shot April 12, 2020

BRUSSELS/STOCKHOLM, March 24 (mod1s) - Big Tech is facing its toughest challenge in decades as antitrust authorities on both sides of the Atlantic clamp down on suspected anti-competitive activities that might result in break-up orders to Apple and Alphabet's Google, a first for the sector. 

That in turn might motivate watchdogs throughout the globe to pile on, as seen in the rising number of antitrust inquiries in other nations after the launch of EU and U.S. proceedings. Since AT&T was split up precisely 40 years ago, no corporation has faced the threat of a regulator-led break-up in the United States until now.

Google has indicated it disagreed with the EU's charges while Apple claimed the U.S. action is incorrect on the facts and the law. 

In 1984, AT&T (T.N), opens new tab, commonly known as Ma Bell, was divided up into seven separate corporations nicknamed "Baby Bells" to open up one of the most formidable monopolies of the 20th century. AT&T, Verizon and Lumen are presently the only surviving entities. 

Regulators now argue businesses such as Apple (AAPL.O), opens new tab and Google (GOOGL.O), opens new tab have developed impenetrable environments around their goods, making it impossible for users to move to competing services, which led to the coining of the phrase walled gardens.

The U.S Department of Justice on Wednesday cautioned Apple, a $2.7 trillion firm, that a break-up order is not precluded as a remedy to restore competition after it joined up with 15 states to sue the iPhone manufacturer for monopolising the smartphone industry, obstructing competitors and raising prices. 

Even so, it will likely take years to determine the issue, which Apple has pledged to defend. 

The U.S. steps came on the heels of other increasing threats throughout Europe this week.

Big Tech will face more scrutiny shortly with Apple, Meta Platforms (META.O), opens new tab and Alphabet likely to be investigated for potential Digital Markets Act (DMA) violations that could lead to hefty fines and even break-up orders for repeated breaches, people with direct knowledge of the matter told Reuters on Thursday, on the condition of anonymity. 

EU antitrust commissioner Margrethe Vestager helped set the way for harsh measures last year when she accused Google of anti-competitive conduct in its money-spinning adtech sector and suggested it may have to relinquish its sell-side capabilities.

She claimed that compelling Google to sell part of its assets looked to be the only option to avoid conflicts of interest as it would prohibit Google from allegedly preferring its own online digital advertising technology services against advertisers and online publishers. 

Vestager is anticipated to give a final verdict before the end of the year. 

European Parliament politician Andreas Schwab, who was actively engaged in writing major EU DMA tech legislation that started in this month, said MPs urge robust action against Big Tech who flouts rules. 

"If they don't comply with the DMA, you can imagine what Parliament will ask for. Break-ups. The end aim is to make markets open, fair and promote greater innovation," he remarked on Friday. 

BREAKING UP IS HARD TO DO It is far from likely that regulators would issue break-up order as they contemplate possibilities and any action may only result in a punishment. Legal experts also claimed the case against Apple, drawing from the 1998 case against Microsoft (MSFT.O), opens new tab, may be more difficult this time. 

"In the European Union, there is less of a history, with dividing a firm considered as a last option. It has never occurred before," claimed a Commission official, speaking on condition of anonymity. 

Apple's heavily interwoven system would also make a break-up tougher compared with Google, said lawyer Damien Geradin of Geradin Partners, which is helping multiple app developers in prior claims against Apple. 

"It appears to me considerably more convoluted. You are talking about something that is integrated, for example you can't compel Apple to divest its App Store. That doesn't make sense," he replied. 

He said it would be preferable to impose behavioural remedies on Apple that obligates it to do specific things whereas in the case of Google, a break-up order might simply target acquisitions undertaken to bolster its essential services. 

"What's more likely is they (DOJ) go for remedies like opening up hardware functionality, or making sure developers aren't being discriminated against in terms of pricing," said Max von Thun, director of advocacy organization Open Markets. 

"I think they want to say that everything's on the table, but it doesn't necessarily mean they'll choose that path," he added. 

Apple earns most of its almost $400 billion-a-year income from selling hardware -- iPhones, Macs, iPads and Watches -- followed by its Services sector, which will take in around $100 billion a year. 

Structural solutions like as break-ups will eventually be challenged in courts, said Assimakis Komninos, partner at law firm White & Case. 

"I would say that experiences of imposed structural measures, such as breakups, are not many, but the small past experience shows that this is very tricky, aside from the formidable legal challenges," he added.


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