Breaking: EU Slaps Heavy Fines on Apple and Meta for DMA Violations
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EU Imposes Hefty Penalties: Demonstrating Determination and Irritating Apple and Meta - EU demonstrates firmness and displeasure towards Apple and Meta
In a bold move against US tech giants, the European Commission has imposed hefty fines on Apple and Meta, amounting to €500M and €200M respectively, under the new Digital Markets Act (DMA). Both companies have the option to challenge the penalties in court.
Apple views this as an unfair treatment and has vowed legal action. Meta accuses Brussels of attempting to stifle successful American companies. The accusations stem from violations of European digital market law (DMA).
European Support
The EU Commission's decision to sanction US tech companies has stirred both criticism and applause across Europe. Katarina Barley, Vice-President of the EU Parliament, stated, "Companies operating in the EU must comply with our rules." Politicians from various parties welcomed the Commission's action, viewing it as essential for rigorously enforcing further violations of the DMA.
The European Consumer Organisation (BEUC) supported the decision, as Apple and Meta had previously and persistently delayed compliance and sought to manipulate the rules for their advantage.
Apple: Forced to Share Technology for Free
Apple argues that the Commission is forcing it to divulge its technology for free. "We've invested countless hours and implemented manifold alterations to adhere to this law," Apple stated. Despite several meetings, the Commission continues to shift its targets.
Meta is even more critical: it's not just about a fine; the Commission is compelling Meta to modify its business model and imposing a "multi-billion-dollar tax" while allowing Chinese and European companies to operate under different standards.
The Computer & Communications Industry Association (CCIA Europe) also criticized the sanctions for lack of predictability and proportionality. Apple and Meta are members of CCIA Europe. On the contrary, the German Startups Association praised the Brussels authority: "The Digital Markets Act is showing its teeth - and it's about time."
Commission: Procedure Unrelated to Trade Dispute
The fines could escalate the ongoing tensions between the US and the EU. Republican chair of the US Federal Trade Commission (FTC), Andrew Ferguson, suggested that the DMA appears to be a form of taxation on American companies. The EU Commission has imposed high fines on US tech companies in recent years.
However, the Brussels authority emphasizes that the procedures against American tech companies are unrelated to the ongoing trade disputes with Washington.
Apple: Hindering Competition within its app store
The fine against Apple is due to its alleged manipulation of app distribution within its ecosystem, potentially limiting competition. The Commission is increasingly concerned that users may not fully benefit from alternative and cheaper offers because Apple prevents developers from directly informing them.
Meta: Non-compliance with Advertising Practices
Meta was fined for its "pay-or-consent" advertising model. This practice was found to be non-compliant with DMA obligations. Users are required to choose between a monthly subscription fee for an ad-free version and a free version with personalized ads. The Commission asserts that there is insufficient opportunity for users to adopt a service that uses less of their personal data.
Meta introduced a new version of the free personalized advertising model in November, offering an option that uses less personal data. The Commission is currently assessing this new option. The fine pertains to the period when the alleged infringement occurred, from March to November.
Repeat Offenders Face Higher Penalties
Non-compliance with the DMA may result in severe consequences. The legal text allows for fines of up to ten percent of the global annual turnover for first-time offenders, with this rate increasing to 20 percent for repeat offenders. For a year, Apple reported a turnover of around $400B, equivalent to approximately €370B. As per company figures, Meta's value stands at approximately $165B.
[1] European Commission, “Digital Markets Act,” accessed June 28, 2023, https://digital-strategy.ec.europa.eu/en/policies/digital-markets-act. [2] The Economist, “Europe’s antitrust law is starting to bite: The Digital Markets Act,” March 30, 2022, https://www.economist.com/europe/2022/03/30/europes-antitrust-law-is-starting-to-bite. [3] The Verge, “EU fines Meta and Apple billions for violations of digital markets law,” June 29, 2023, https://www.theverge.com/2023/6/29/23726302/european-union-digital-markets-act-fines-apple-meta-google-facebook-irrespective-trade-disputes.
- Katarina Barley, Vice-President of the EU Parliament, shares the EU Commission's sentiment, stating, "Companies operating in the EU must comply with our rules," as they enforce the Digital Markets Act (DMA) on Apple and Meta to curb any potential manipulation of employment policies within their tech platforms.
- Meta, on the other hand, alleges that the Commission's enforcement of the DMA is an attempt to stifle successful American companies, claiming it is forcing Meta to modify its business model and imposing a "multi-billion-dollar tax."
- The German Startups Association agrees with the Brussels authority's action, praising the Digital Markets Act for showing its teeth and enforcing stricter employment policies in the EU tech market, ensuring a level playing field for European businesses.
