EU imposes €700 million penalties on Apple and Meta for digital misdeeds: What's the subsequent action?
Rewritten Article
The European Union slapped Apple with a €500 million fine and Meta with a €200 million fine on Wednesday for skirting the Digital Markets Act (DMA). The tech titans were accused of suppressing competition and limiting user choices.
The EU competition enforcer blasted Apple for imposing technical and commercial restrictions that prevented app developers from guiding users towards cheaper deals beyond the App Store.
Similarly, Meta's "consent or pay" model, launched in November 2023, flouted the DMA during the period up to November 2024. This model obligated Facebook and Instagram users to permit tracking or cough up for an ad-free service.
The year-long investigation by the European Commission led to these fines.
Why Apple Got Fined
The DMA obliged Apple to let developers direct customers to external apps for purchasing purposes without a fee, to bypass platform fees. The Commission discerned that Apple's strictures blocked app developers from reaping the rewards of non-App-Store distribution channels. Moreover, consumers were mostly oblivious to alternative, cheaper offers due to Apple's prohibition on app developers from directly informing them. The Commission asserted that Apple failed to substantiate that the restrictions were necessary and proportionate.
Regulators lampooned Apple's conditions, including an additional fee, asserting that they made alternative distribution channels less appealing, like the one offered by Epic Games. Apple announced its intention to contest the EU fine.
Meta's Sanction
Introduced in November 2023, Meta's "consent or pay" model offers Facebook and Instagram users a free service funded by advertising revenue if they consent to tracking. Conversely, an ad-free service can be purchased for €5.99 per month on the Web and €7.99 per month on apps.
The Commission contended that the model breached DMA guidelines by limiting users' choices about data usage. The fine covers the period from when the DMA obligations became enforceable in March 2024, until Meta revamped its ad model in November 2024.
Meta countered this decision, stating, "The Commission is forcing us to alter our business model, effectively imposing a multi-billion-dollar tariff on Meta while obligating us to offer a subpar service."
What's Next?
After a series of discussions with the Commission, Meta introduced a revised version of the free personalized ad model in November last year. This update included a new option using less personal data to advertise. The Commission continues to evaluate this option and remains in dialogue with Meta, requesting evidence on the practical impact of this "less ads" model.
Analysts such as Austrian privacy activist Max Schrems, who has frequently sued Meta for supposed breaches of the EU's privacy law, have criticized the "less ads" model for presenting usability issues. Users are confronted with "ad breaks" that pause their feed scanning until a timer elapses and Meta encourages them to choose the fully personalized option.
(FRANCE 24 with Reuters)
Enrichment Data:
Key Findings:
- Apple violated the DMA by forbidding App Store apps from mentioning or facilitating alternative payment options outside its system. This commission-induced hindrance restricted users' access to cheaper alternatives and stifled competition among app developers.
- Apple could face additional fines for non-compliance if it fails to implement the required changes within a specified timeline. These modifications may include allowing app developers to guide users to cheaper deals outside the App Store without restriction.
- Meta's "pay or consent" advertising model came under fire for breaching DMA guidelines regarding user consent and fair competition by limiting users' choices and obliging them to accept tracking or incur fees for an ad-free experience. Meta's new "less ads" model is under review by the Commission, with concerns regarding its impact on users' choices and privacy.
- Apple's business practices violated the Digital Markets Act (DMA) by preventing app developers from informing users about cheaper options outside the App Store, thus limiting choices and stifling competition.
- Meta's "consent or pay" advertising model, a breach of DMA guidelines, imposed fees on users for an ad-free service and limited choices about data usage, during the period from March 2024 to November 2024.
- The European Commission is now evaluating Meta's revised "less ads" model, introduced in November last year, to determine if it addresses the concerns regarding user choices and privacy, as outlined in the DMA.
