The European Commission has issued its first penalties under the EU Digital Markets Act (DMA), fining Apple €500 million and Meta €200m and requiring both to make changes to how they operate.
The DMA came into effect in 2023 and was created to regulate competition in the digital economy, in part by reining in abuse of power by larger platforms.
Apple was found to be in breach of “anti-steering obligations” over restrictions that ban apps from informing customers of offers outside the App Store, which the EC said limited customer choice.
The Commission has ordered Apple to remove that restriction, and the tech giant plans to appeal the fine.
Meta, meanwhile, was fined for its introduction of a model that would force users to pay for an ad-free service or consent to their data being used for advertising.
The Commission said that fell foul of an obligation under the DMA to give consumers the choice of a service that uses less of their personal data.
Both companies made it clear they disagreed with the fines. In a statement, Apple hit out at the Commission, suggesting the penalties show it is “unfairly targeting” the company.
The tech giant said the decisions are “bad for the privacy and security of our users, bad for products, and force us to give away our technology for free”.
“We have spent hundreds of thousands of engineering hours and made dozens of changes to comply with this law, none of which our users have asked for,” the statement added.
“Despite countless meetings, the Commission continues to move the goal posts every step of the way. We will appeal and continue engaging with the Commission in service of our European customers.”
Meta offered harsher criticism in its response, accusing the EC of treating US businesses unfairly.
“The European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards,” Meta’s Chief Global Affairs Officer, Joel Kaplan, said in a statement.
“This isn’t just about a fine; the Commission forcing us to change our business model effectively imposes a multi-billion-dollar tariff on Meta while requiring us to offer an inferior service,” he added. “And by unfairly restricting personalized advertising the European Commission is also hurting European businesses and economies.”
A ‘strong and clear’ message from the EU
Despite the complaints, Teresa Ribera, Executive Vice-President for a Clean, Just and Competitive Transition, said in a statement the fines send a “strong and clear message” to digital companies, adding that the legislation is a crucial tool to ensuring fair markets.
“Apple and Meta have fallen short of compliance with the DMA by implementing measures that reinforce the dependence of business users and consumers on their platforms,” Ribera said. “As a result, we have taken firm but balanced enforcement action against both companies, based on clear and predictable rules.”
“All companies operating in the EU must follow our laws and respect European values,” she added.
That reference to European values reflects geopolitical turmoil between the US and the rest of the world, according to Joe Jones, director of research and insights at IAPP.
“The fines land at a time of heightened scrutiny by the current US Administration on the application of EU laws to US companies,” Jones said.
“The EU Digital Markets Act was even name-checked in an Executive Order issued by President Trump last February as facing scrutiny as part of the Administration’s work to “defend American companies and innovators from overseas extortion,” he added.
“Open questions include not only how will addressed companies respond to EU regulatory enforcement but how will overseas governments, including and especially the US, respond. The U.S. Administration has declared it will consider responsive actions like tariffs to combat certain foreign government policies levied against US companies.”
Beyond the fines
As Meta noted, there’s more to the decision than fines. Indeed, despite the seemingly large figures, the fines were much smaller than the EU could have levied, as high as 10% of their global annual turnover. Last year, Meta’s earnings topped $165 billion and Apple’s was $391 billion.
In a statement, the EC said that developers using Apple’s App Store should be able to tell customers about alternative offers outside that store, such as discounted subscription offers. The EC added that Apple had failed to give a reason why such restrictions are “necessary and proportionate.”
Beyond the fine, the EC has ordered Apple to remove such restrictions and not introduce similar restrictions in the future.
The EC also closed an investigation into Apple’s tactic of not allowing its own pre-installed apps to be removed from its devices, such as its Safari web browser.
Following a “constructive dialogue”, Apple made it easier to select a new default browser on iPhones, uninstall several Apple pre-installed apps, and change default settings for other tools such as keyboards and translation.
Alongside those two investigations, the EC also issued preliminary findings on Apple banning third-party app stores and requiring users to download apps via the official App Store.
The EC said that its preliminary view is that Apple isn’t complying with the DMA by disincentivising developers from offering apps elsewhere via a new fee, the Core Technology fee, while also introducing strict eligibility requirements.
Apple can now respond to those findings ahead of a final ruling.
For Meta, it has been fined under DMA rules that mean “gatekeepers” must get user consent for combining personal data between services, and still offer an equivalent alternative service for any who refuse to consent.
This decision refers to Meta’s “consent or pay” advertising model that was introduced in November 2023, which gave Facebook and Instagram users the option of consenting to their data being combined for personalized advertising or paying a subscription to opt out and receive an ad-free service.
The EC said that model didn’t offer enough of an alternative service for those who opted out. A year later, Meta offered a new version that included a tier that used less personal data to display ads.
This particular fine applies only to the period up to November 2024 when those changes came into effect, as the regulator is still considering the changes.
Alongside the advertising data ruling, the EC also announced that Facebook Marketplace was small enough that it should no longer be designated under the DMA.
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