Report from Politico
In Brief – After more than a year of investigations, the European Commission has announced that it has fined Apple €500 million and Meta €200 million for failing to comply with EU’s Digital Markets Act (DMA). Apple, Google, and Meta were the first “gatekeeper” companies investigated under the DMA. The regulator objected to Apple’s App Store rules and fees, arguing they do not allow app developers to freely steer consumers to alternative buying channels outside the Apple ecosystem. The commission argues that Meta’s ad-free subscription plans for Facebook and Instagram, dubbed “Pay or Consent” by critics, do not offer users adequate choice, demanding a free version with less-targeted ads. Although the DMA authorizes fines of up to 10% of a company’s global annual sales, meaning over €34 billion for Apple and €14 billion for Meta, the announced fines met the expectation that penalties would be relatively modest, and the Commission would focus on compliance. Regulators are currently reviewing Meta’s latest plan to offer free versions of their top platforms with less-targeted ads and has given Apple 60 days to meet its demands related to app rules and fees. Apple and Meta both publicly objected to the Commission decisions arguing that their business models were unfairly penalized, and users will be harmed. Both are expected to appeal.
Context – A trade war probably won’t be caused by EU tech regulation, but Big Tech’s treatment is intertwined with the current trade standoff. President Trump has often called EU tech regulation corporate taxes, the White House issued a Presidential Memorandum authorizing tariff retaliation for all manner of foreign digital business levies, and Meta specifically called this EU decision a “tariff”. But EU officials have repeatedly said they would not walk back their digital rules, and they couldn’t on multiple legal and political levels. Instead, they are trying to thread the needle with moderate fines and meaningful compliance demands. The EU’s Google Search decision is still months away. And the Trump Administration is in federal court trying to break up Google and Meta at the same time. Finally, Europe might have more capacity to give ground on digital company taxes.