Adds Meta to appeal decision in paragraph 3

MILAN, Dec 24 (Reuters) - Italy's antitrust authority (AGCM) on Wednesday ordered Meta Platforms META.O to suspend contractual terms that could shut rival AI chatbots out of WhatsApp, as it investigates the U.S. tech group for suspected abuse of a dominant position.

A spokesperson for Meta called the decision "fundamentally flawed," and said the emergence of AI chatbots "put a strain on our systems that they were not designed to support".

"We will appeal," the spokesperson added.

The move is the latest in a string by European regulators against Big Tech firms, as the EU seeks to balance support for the sector with efforts to curb its expanding influence.

Meta's conduct appeared capable of restricting "output, market access or technical development in the AI chatbot services market", potentially harming consumers, AGCM said.

In July, the Italian regulator opened the investigation into Meta over the suspected abuse of a dominant position related to WhatsApp. It widened the probe in November to cover updated terms for the messaging app's business platform.

"These contractual conditions completely exclude Meta AI's competitors in the AI chatbot services market from the WhatsApp platform," the watchdog said.

EU antitrust regulators launched a parallel investigation into Meta last month over the same allegations.

Europe's tough stance - a marked contrast to more lenient U.S. regulation - has sparked industry pushback, particularly by U.S. tech titans, and led to criticism from the administration of U.S. President Donald Trump.

The Italian watchdog said it was coordinating with the European Commission to ensure Meta's conduct was addressed "in the most effective manner".

(Reporting by Elvira Pollina; Editing by Alexander Smith)

((elvira.pollina@thomsonreuters.com))