EU to probe big tech companies in digital market overhaul

By Julia Fioretti

BRUSSELS (Reuters) - The European Union will announce a wide-ranging probe on Wednesday into how big technology companies such as Google (GOOGL.O), Amazon (AMZN.O) and Facebook (FB.O) use their market power as it considers whether to regulate them more tightly.

The inquiry, which by its nature will inevitably focus heavily on U.S. firms, follows calls from France and Germany for regulation of so-called "essential digital platforms", encompassing everything from e-commerce sites such as eBay (EBAY.O) to social media companies.

European Commission Vice-President Andrus Ansip will unveil his "Digital Single Market Strategy" at noon (6:00 a.m. EDT) in Brussels. It will aim to update copyright rules, knock down barriers to cross-border parcel deliveries and ensure European online businesses can compete with their bigger U.S. counterparts.

The inquiry differs from an antitrust investigation of the kind launched by the EU into Google five years ago, in that it is not aimed at enforcing existing law through penalties.

Rather it will look at whether Internet platforms are transparent enough in how they display search results and if they promote their own services to the detriment of competitors, according to a draft of the strategy seen by Reuters.

Politicians and businesses across Europe have been calling for the market power of dominant U.S. tech firms to be curbed to help Europe's fledgling web industry compete, leading to accusations of protectionism from U.S. President Barack Obama.

'GEO-BLOCKING'

The Computer and Communications Industry Association (CCIA), whose members include Google, Microsoft, eBay, Facebook and Amazon, said the idea of regulating platforms was ill-conceived given that businesses from newspapers to e-commerce sites to cars were increasingly becoming digital platforms.

"Platform regulation would hit European platform companies hardest given they grow here," it added.

As part of its strategy, the Commission will also announce on Wednesday an "ambitious overhaul" of the bloc's regulation of the telecoms sector, to take place next year. It will take into account the increased competition from services such as Facebook-owned WhatsApp and Skype (MSFT.O), a decision that will be cheered by the telecoms industry.

The Commission wants to boost economic growth in the 28-country bloc by knocking down barriers between countries in the online world as it has done in the offline one, pushing businesses to sell across borders.

It will seek to clamp down on so-called "geo-blocking", the practice whereby businesses restrict access to websites based on location or re-route customers to their local website, which may have different prices.

"These unjustified practices should be expressly prohibited so that EU customers and businesses can take full advantage of the single market in terms of choice and lower prices," the draft strategy states.

(Editing by Pravin Char)