Tech giants Apple and Google are in the European Union's hot seat this week as Apple is accused of hoarding the tech behind its tap-to-pay function, and Google fights a $1.6 billion fine over its alleged push of its AdSense platform over competitors. The EU is also working to integrate a broader set of rules that would govern big tech, potentially changing the way customers use their phones and apps worldwide. Jon Swartz, Senior Reporter at MarketWatch, joins Closing Bell to discuss the EU's big tech crackdown, what could come of it, how your phone's features could change, and more.

Closing Bell

Big Tech in the EU's Hot Seat as Companies Accused of Violating Antitrust Laws, Monopolizing Ad Platforms and Mobile Payment Tech

Welcome back to closing bell on cheddar news. Everyone big tech in the hot seat overseas feels like a reoccurring headline. But today google fighting a $1.6 billion fine imposed by the european commission over the tech giant's alleged abuse of power related to its adsense platform. Apple meanwhile, accused of restricting mobile payment development by hoarding access to the tech behind its tactic pay feature. So what happens next for these tech giants and how could these penalties change the way that we use our phones? Well, joining me now is john schwarz and your reporter at Market Watch, john always good to see you. Hello, what could this mean for Apple and android users abroad? Well, you know what's happening in europe is probably going to happen in the US, but it won't happen in the US for probably at least a year. So what's happening in europe specifically, which has the attention of Apple and google is the use actions including this new law that's coming out as early as october called the digital markets act. So the news today about Apple until lesser extent about google kind of ties into this, this law that's going to go into effect in a few months. And this law is basically to the consternation of Apple and google can have a major impact on how they do business, especially with the app store and google play. It's basically john let me ask you this as we break down how it'll impact their business. Anyone watching the stock market, we're down here on the floor of the stock exchange, I am doing this show, They see big technology names really underperforming of late, but I think the major consensus there is because the overall market is down and higher interest rates is bad news for richly valued technology names. Of course, if you add this to the mix, potentially it could be a wait for big technology as well. How much could it impact their business on a dollars and cents basis? Well, I'm thinking probably realistically billions of dollars. I mean if if you're going to stop Apple, this practice of blocking the installation of apps from outside its own app store and you're going to allow kind of a more level playing field for developers, freeing them from commission fees charged by Apple google facebook amazon. That's going to hit them extremely hard. And you know what's happening based on all the results last week, which were announced? Yes, Yes. As you, as you pointed out there, being hit by multiple things, inflation, supply chain constraints, geopolitical risk in Russia. I mean, that accounts for a small percentage of all their sales. You have this kind of perfect storm of obstacles that's going to get all of these companies and this probably is going to cost them significant amounts of money. Um and plus not to not to take into account Apple's privacy changes, which impact meta in particular, and to a lesser extent google amazon. So you've got all these things happening. So it's, in a sense a lot of these market valuations are going to be eviscerated and going forward, there's gonna be a huge challenge in terms of revenue market valuations eviscerated, john I think some people might be shocked to hear that because Apple and alphabet, the parent company of google have been the gifts that kept on giving for this stock market really for decades since the financial crisis. What do you mean by eviscerated? Well, I mean, it's shaped, I mean when you're losing billions of dollars market value, I consider that an evisceration and take into account again with Apple, they had a good, they had a good quarter, but they also mentioned in terms of 4 to $8 billion in additional costs that didn't go over very well and it was reflected in the after hours trading, which hurt them. Same thing with google, they had a fairly decent quarter, but going forward, the optimism isn't as good because they're not going to hit their their sales target. Here's another question for you. Um you which does seem to be obviously paving the way here for what we might eventually see in the US when it comes to regulating big technology based in the US, but doing business abroad is um you lawmakers unveiling that digital markets act last week. What does that entail? How does it impact users and these big technology companies? Well, basically it would free developers from commission fees charged by people like Apple and google, It would stop Apple's practice of blocking the installation of apps from outside its own app store, which Apple refers to as sideloading apple things that would create a privacy or security issue for its customers. But now let's go back to the Apple epic case. Apple won nine out of 10 rulings in that federal court case last year but the district court found that Apple's anti steering provisions violated California's unfair competition law and that has the attention of Apple. Actually the obsession of them, tim Cook has spoken about that recently a couple of weeks ago about its dangers. We had them speak I believe at the web summit with Craig Federici. It's it's something that Apple would loathe that happened because in a sense it disrupts they're Apple store and their services which is so closely tied into the iphone in terms of the that the revenue ecosystem. So that is one of the problems that they're facing in the U. S. There is a legislation in the Senate which would in a sense parallel what's happening in europe with the D. M. A. And then there's a legislation in the House that does the same thing. So you have this dual tracks of laws, potential laws in the House and the Senate that kind of parallel what's going on in europe. So again europe and is always ahead of the US in terms of regulation. But the US is catching up and they're going to probably follow that model, interesting. Okay, so another question um, alphabet always does seem to get the focus abroad. It's already been slapped with billion dollar fines in the past, of course by you lawmakers. Apple now increasingly in focus. What about other companies like meta even amazon, john I mean big tech as we know it in the U. S. Are there other big tech companies and then do you see their business jeopardized abroad? Yes. So in addition to Apple, I would assume amazon and meta in terms of the impact of digital markets act, the the reason why google keeps getting find is it's probably the easiest, easiest big tech to attack. I mean, this is at least the third case that I know of. I think there's the equivalent of €8.2. like that's probably over $10 billion dollars in antitrust fines. This dates back years, but in a sense, it sets a precedence for the other tech companies. Um and, and that's something that we're looking at closely. Not just not just google. Alright, john we got to leave it there. Always good to see you on the show. That's john Schwartz Senior Reporter at Market Watch. Thank you