By Sam Schechner And Tom Fairless
Increasingly wary of the growing power of a set of U.S.
technology superpowers, European officials are escalating their
scrutiny of companies including Facebook Inc., Apple Inc. and
Google Inc. in realms that span taxation, personal privacy and
competition law.
Government privacy watchdogs from France, Spain and Italy have
in recent weeks joined a group that is investigating Facebook's
privacy controls, officials said, doubling the number of European
countries where regulators are analyzing the way Facebook handles
the personal information and connections gleaned from more than 300
million users in Europe. At the same time, the European Union's
antitrust regulator in Brussels is examining Apple's agreements
with record labels, as the iPhone maker prepares to launch a
subscription music-streaming service that will compete with
European players such as Spotify AB.
EU officials are also planning to move forward in a long-running
competition probe of Google in coming weeks, a person familiar with
the matter said Wednesday, setting the stage for possible formal
charges against the search giant. Google has denied any
anticompetitive behavior. Meanwhile, Amazon.com Inc. and Apple have
been named in recent tax investigations. France and Germany are
pushing for new rules to regulate big Internet companies.
All these fresh moves follow years of probes, regulatory
scrutiny and saber-rattling from politicians in Brussels and other
European capitals. But the recent pile-on also comes as regulators
and government officials in Europe become increasingly emboldened
to take on Silicon Valley.
In part, European officials say they must protect European
industries--from advertising to automobiles-- from foreign
companies they allege don't play by local rules. But European
authorities are also banding together to challenge companies in new
ways, including under new interpretations of EU law that haven't
been tried previously.
"We are showing a united front before a global actor," Mathias
Moulin, a top official at French privacy regulator CNIL, said of
the Facebook probes. "Facebook, Google and the others--they require
coordinated responses."
Facebook said it follows EU privacy laws and has been audited
regularly by the privacy regulator in Ireland. The company added
that it hasn't yet heard from France, Spain or Italy about privacy
probes. "If we receive additional inquiries, we will respond
appropriately," a spokeswoman said.
The wave of privacy investigations into Facebook is a prime
exhibit of European enforcers' new swagger. Until now, Facebook
tended to fall under the purview of a regulator in a single
country, Ireland, where it has its European headquarters. But with
Europe planning a strict new privacy law--and with backing from
Europe's highest court that privacy regulators have jurisdiction
over foreign companies--some regulators are taking more-aggressive
stances.
"For Facebook, this is a telling sign of the future," said
Christian Wiese Svanberg, a privacy attorney at Plesner, a
Copenhagen-based law firm. "This is exactly the kind of thing that
they want to be doing going forward," he added of the
regulators.
At issue in the Facebook probes is an element of last year's
"right to be forgotten" decision by the European Court of Justice,
which stemmed from a case in Spain. In making its ruling, the court
said the Spanish privacy regulator had the jurisdiction to enforce
EU privacy laws against Google because the company had an
advertising-sales office in Spain.
Initially, privacy watchdogs in the Netherlands, Belgium and
Hamburg, Germany, opened probes into the new privacy policy
Facebook rolled out earlier this year. Since then, France and Spain
recently added their own investigations, while Italy says it is
coordinating with the group but not investigating
independently.
Facebook has asserted that the regulators launching the
coordinated probes aren't empowered to investigate it, because its
EU privacy compliance is overseen in Ireland. People close to
Facebook add that the Google-Spain precedent doesn't apply because
Google didn't previously claim to submit to any EU data-protection
regulators as Facebook does.
But some European regulators don't accept that reasoning. "As we
certainly do not agree with Facebook here, our investigations are
ongoing and will be continued," said Johannes Caspar, head of the
data-protection authority in Hamburg, where Facebook's German
office is located.
Antitrust is another area where European regulators have started
to push further than in the past. The antitrust charges the EU
might file against Google in coming weeks would mark a stiff
escalation of the prior antitrust chief JoaquĆn Almunia's more
pragmatic approach of seeking a settlement.
When it comes to its tax investigations, the EU is also turning
to a relatively new tactic: arguing that Amazon's and Apple's tax
arrangements with Luxembourg and Ireland, respectively, amount to
illegal state aid. That could allow the bloc to claw back billions
of euros in back taxes. Both Amazon and Apple, as well as the
countries, deny there were sweetheart deals. Amazon and Apple also
say they comply with tax laws.
Still, some U.S. tech companies are exploiting EU laws to fight
back. Uber Technologies Inc., which has faced a mounting regulatory
backlash to its rapid growth in Europe, said this week it had filed
complaints with regulators in Brussels against France, Germany and
Spain. It claims those countries have violated EU laws requiring
service providers to be treated in a nondiscriminatory way by
seeking to ban some of Uber's services.
"This is supposed to be a single market," said Mark McGann,
Uber's head of public policy for Europe, the Middle East and
Africa. "What we're finding is that we're getting treated in
completely different ways in different countries, and even within
individual countries."
The new Apple case related to music puts the EU in the middle of
yet another, new business model that is shaking up the traditional
world of record labels, such as Universal Music Group, owned by
Vivendi SA of France.
The European Commission, the region's top competition regulator,
has sent questionnaires to several record labels seeking
information about their dealings with Apple, two people familiar
with the matter said Thursday.
The regulator is interested in the companies' deals and
correspondence with Apple, as well as their dealings with other
music-streaming services, one of the people said. It is concerned
that Apple could use its market clout and relations with music
labels to pressure them to abandon rival streaming services, one of
the people added.
Apple and the European Commission both declined to comment on
the music-streaming inquiry.
The decision to send questionnaires is an early step in the EU's
antitrust process and doesn't mean a formal investigation will be
opened. If EU regulators do press ahead with formal charges, they
could result in fines or demands that Apple change its
behavior.
Apple bought the $10-a-month subscription streaming service
Beats Music last year as part of a $3 billion acquisition that
included headphone maker Beats Electronics. The deal, Apple's
largest ever, offered it a way to bolster its iTunes music
offerings as album downloads--a business that Apple
pioneered--started to slow in the face of streaming services such
as Spotify and Pandora Media Inc. Apple is expected to relaunch
Beats Music later this year as part of iTunes.
Access Investor Kit for Amazon.com, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0231351067
Access Investor Kit for Apple, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0378331005
Access Investor Kit for Facebook, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30303M1027
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P5089
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P7069
Access Investor Kit for Pandora Media, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6983541078
Subscribe to WSJ: http://online.wsj.com?mod=djnwires