Europe continued its crackdown on U.S. tech today as Alphabet (GOOGL) was slammed with two charges of breaking competition rules and Apple (AAPL) was told to more openly share its systems.
GOOGL Favored Own Services
The European Commission’s competition watchdog issued preliminary findings charging Google with breaching the Digital Markets Act. As reported by Reuters, the first charge concerns Google’s app store Google Play. Antitrust regulators said Alphabet technically prevents app developers from freely steering consumers to other channels for better offers. They said a service fee charged by the company for “facilitating the initial acquisition of a new customer by an app developer via Google Play go beyond what is justified.”
In the second charge, regulators said Google favored its own services such as Google Shopping, Google Hotels and Google Flights over rivals. “The two preliminary findings we adopt today aim to ensure that Alphabet abides by EU rules when it comes to two services widely used by businesses and consumers across the EU, Google Search and Android phones,” EU antitrust chief Teresa Ribera said in a statement.
Reuters reported that Alphabet, which has been fined more than $8.7 billion by the EU in the last decades on competition grounds, risks fines of up to 10% of its global annual sales if found guilty of breaching the Digital Markets Act. This can be doubled to 20% for repeat offenders.
Apple also in Crosshairs
Google was not the only U.S. tech giant in European crosshairs. The commission ordered Apple (AAPL) to open up its operating systems more to connected devices, such as smartwatches or headphones from other brands. According to the Financial Times if Apple refuses to comply then the commission can take further steps under the Digital Markets Act which could ultimately lead to financial penalties. Apple said the decision slowed down its ability to “innovate for users in Europe and forces us to give away our new features for free.”
The moves come despite much rancour from President Trump about EU fines on U.S. companies and the risk of potentially retaliatory tariffs. However, the EU seems determined to stick to its course and create more digital competition on the continent.
Is GOOGL a Good Stock to Buy Now?
On TipRanks GOOGL has a Moderate Buy consensus based on 25 Buy and 11 Hold ratings. Its highest price target is $235. GOOGL stock’s consensus price target is $215.59 implying an 32.56% upside.
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