The EU crackdown on big technology began in earnest on Wednesday as the European Commission issued its first fine under the Digital Markets Act. This is a regulation designed to prevent major players in the technology world from abusing dominant positions in the industry.
Apple’s fines total for the larger of the two, totaling 500 million euros ($570 million), and it follows a research into whether the company is investigating whether it will save customers money and save cheaper streaming subscriptions if it pays outside the app store ecosystem. The European Commission discovered that Apple was preventing app developers from notifying people about cheaper payment methods, and ordered the company to change this practice.
Meanwhile, Meta has received a fine of 200 million euros ($228 million) as it uses Meta’s platform for free, including Facebook, Instagram and WhatsApp, and offers Europe the binary choice of using Meta’s platform to accept the company, paying a premium across the service or premium to store data individually.
The European Commission initially told META that the model was not DMA-compliant, so the company introduced new practices that provide people with more options than how they use their data. However, the company is still receiving fines for its previous models.
Silicon Valley and the EU have long had a very important relationship. Almost a decade ago, Apple CEO Tim Cook dismissed the massive EU tax bill as “political crap.” However, as geopolitical tensions between Europe and the US are now growing, fines are more divisive than ever. It’s often difficult to see how high-level regulatory decisions affect the tech industry, but it’s all we need to understand the power of the EU to drop the iPhone’s lighting ports and support USB-C charging to shake up the actions of high-tech companies.
The Digital Markets Act has two purposes. It gives promising tech companies the opportunity to prove themselves in an industry dominated by the world’s wealthiest companies. It is also designed to ensure European tech users (and sometimes even further away). Plus, in addition to the best services and transactions, it is designed to ensure you have the ability to decide for yourself how to spend your money and how to use your data. The European Commission has the authority to fine up to 10% of annual global revenues under this regulation, but these fines fall below this threshold to proportionate to certain violations of the law.
“Ensuring free business and consumer choice is at the heart of the rules set out in the Digital Markets Act,” said Henna Wilkunen, vice president of technical sovereignty at the European Commission. In a statement Tuesday. “This includes giving citizens complete control over when and how data is used online, and ensuring that businesses are free to communicate with their customers. The decision adopted today has discovered that both Apple and Meta have to take this free choice from users and change their behavior.”
However, to Silicon Valley tech giants, the EU approach often appears unnecessarily punitive. In a statement issued Wednesday, an Apple spokesman accused the European Commission of moving its goal post and said the company plans to appeal the decision.
“Today’s announcement is another example of the European Commission unfairly targeting Apple in a series of decisions that are bad for users’ privacy and security, products and enforce free technology,” a company spokesperson said. “We spent hundreds of thousands of engineering hours and made dozens of changes to comply with this law, but users haven’t requested it.”
Meanwhile, Joel Caplan, Meta’s Chief Officer of Global Affairs, said the European Commission is “trying to make American businesses successful while ensuring Chinese and European companies can operate under different standards.” He said, “This isn’t just fines. The committee that forces them to change their business model effectively imposes multi-billion dollar tariffs on the meta, demanding that they provide inferior services.
Meta, who is suffering for being penalized after making multiple changes to their business model, could also sue a fine. The company asserts that there is nothing in the Digital Markets Act to justify the changes the Commission is seeking for.
