EU Commission Imposes First Major Sanctions Under Digital Markets Act

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EU Commission’s Landmark Decision

The European Union (EU) Commission has taken decisive action by imposing its first significant sanctions under the Digital Markets Act (DMA), a legislative effort aimed at curbing the dominance of major tech companies. The Commission levied a fine of €500 million (approximately $570 million) on Apple and €200 million (approximately $228 million) on Meta. These penalties were imposed due to practices that restricted user choices and business models that compromised data privacy preferences.

Sanctions on Apple and Meta

Apple was specifically targeted for its App Store policies, with the Commission arguing that Apple’s restrictions hinder app developers from directing consumers to more affordable options outside the App Store. Criticism was also directed at Apple’s new fee model known as the “Core Technology Fee”. In response, Apple announced plans to appeal the decision, stating, “Today’s actions highlight yet another instance of the European Commission unjustly targeting Apple with decisions that are detrimental to our users’ privacy and security, as well as our products, compelling us to share our technology without compensation.”

Meta faced sanctions for implementing a “pay or consent” model for its Facebook and Instagram platforms. This system, introduced in November 2023, obliges users to either pay for an ad-free experience or consent to the use of their personal data for targeted advertising. The EU Commission emphasized that this model did not empower users to make a genuinely free choice. Meta, echoing Apple’s sentiment, expressed discontent with the decision, arguing that the European Commission disproportionately targets successful American companies while showing leniency towards Chinese and European firms. Meta also contended that the ruling not only imposes a financial penalty but also interferes with its business model.

The EU Commission has stipulated that both Apple and Meta must adhere to its rulings within two months to avoid incurring regular daily fines.

Potential Trade Tensions with the US

The EU’s actions have raised concerns about potential trade tensions with the United States. Former US President Donald Trump previously threatened retaliatory tariffs against nations that levy fines on American companies. According to EU insiders, this geopolitical aspect may have influenced the relatively moderate fines issued under the leadership of Teresa Ribera. Under the previous EU antitrust chief Margrethe Vestager, discussions of much heftier fines were prevalent.