Regulatory rap: An Apple store in Paris, France. Apple responded to its fine by accusing the EU’s regulators of being discriminatory. — Reuters
NEW YORK: Apple Inc and Meta Platforms Inc have been hit by relatively modest European Union (EU) fines totalling 700mil or about US$798mil for violating tough new antitrust rules for Big Tech, following warnings of harsh retaliation from US President Donald Trump.
EU regulators levied the penalties – 500mil against Apple and 200mil against Meta – under its Digital Markets Act (DMA), which includes a list of dos and don’ts mainly aimed at Silicon Valley giants.
“Apple and Meta have fallen short,” EU anti-trust chief Teresa Ribera said on Wednesday. “All companies operating in the EU must follow our laws and respect European values.”
The punishments – the first under the DMA – are far lower than previous penalties under traditional EU competition law, and are likely to be seen as an attempt to avoid provoking Trump, who recently laid out a swath of tariffs on global economies.
He’s specifically called out the EU’s tech regulations as the kind of non-tariff trade barrier that his so-called reciprocal tariffs are intended to target.
The European Commission said that Apple had failed to allow developers to link out from its App Store in order to make sales outside of the company’s marketplace.
Meta’s business model for ad-free services on Instagram and Facebook also fell afoul of the tech law, which gives regulators fining powers of up to 10% of a company’s global annual revenue.
Both firms must comply with the EU decision within 60 days, or face the risk of further financial penalties.
Apple was also warned that its new fee structure for app developers – itself a plan devised to comply with EU rules – isn’t in line with the EU Big Tech rulebook.
Apple responded fiercely to the EU penalty, accusing the bloc’s regulators of discriminating against the company and forcing it to give away its technology for free.
The Cupertino, California-based company said it would appeal to the EU courts. Just last year, the company was hit with a 1.8bil EU fine for shutting out music-streaming rivals on the iPhone.
Meta’s head of global affairs Joel Kaplan also hit back, saying the EU “is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards”.
The EU decision “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”, said Kaplan. “And by unfairly restricting personalised advertising the European Commission is also hurting European businesses and economies.”
Brian Hughes, a spokesman for the National Security Council in the White House, called the Digital Markets Act a “discriminatory” part of the EU’s “regulatory death spiral”.
“This novel form of economic extortion will not be tolerated,” Hughes said.
“Extraterritorial regulations that specifically target and undermine American companies, stifle innovation, and enable censorship will be recognised as barriers to trade and a direct threat to free civil society.”
Asked about whether the commission had deliberately kept the fines low to avoid provoking Trump, the Brussels-based EU commission said the fines were “proportionate” to the alleged gravity and duration of breaches of the DMA, which became applicable two years ago.
“This is about enforcement. It’s not about trade negotiations,” commission spokesperson Arianna Podesta told reporters.
Still, the size of the fines “suggest an easing of European regulatory pressure on US tech giants,” according to Bloomberg Intelligence analyst Tamlin Bason.
“Penalties under the competition law could have been as much as 10% of total revenue, but ended up being less than 0.15% of each company’s 2024 sales, likely reflecting caution on aggressive enforcement against a tense backdrop in US-EU relations,” Bason said.
Despite its fine, Apple did see EU watchdogs close an investigation into online browsers after it rejigged how it offers users more choice on their iPhones.
EU regulators also backtracked on their decision to target Facebook Marketplace under the DMA.
Meta was hit by a 798mil EU fine for alleged abuses on that service last year under standard antitrust law.
Apple shares rose 2.4% and Meta advanced 4% in New York trading as of 4:15pm New York time while the S&P 500 Index was up 1.7%.
Over recent years the EU has made costly penalties against firms, including more than US$8bil in fines against Alphabet Inc’s Google and a separate order for Apple to pay Ireland back taxes of 13bil.
Under its abuse-of-dominance rules, it has also forced changes out of Amazon.com Inc’s marketplace platform and Apple’s tap-and-go chip, while also investigating Microsoft Corp’s video conference software, Teams. — Bloomberg
