EU slaps Apple, Meta with €700 million in fines for not complying with DMA

Tensions between the US and Europe face escalation after Apple and Meta were handed a fine of €500 million and €200 million, respectively, on Wednesday for failure to comply with EU’s Digital Markets Act (DMA). This is the first penalty imposed by the European Commission on any company for violation of DMA since it came into effect in May 2023. 

The Trump administration has accused Europe of unfairly targeting US tech companies with discriminatory fines and threatened them with retaliatory tariffs if such fines continue.

Early this month, the US imposed tariffs on several of its allies, including the EU, citing a $300 billion trade deficit. While tariffs on most countries have been paused for 90 days, tariffs on Chinese imports have remained intact and gone up to 145% in retaliation to tariff hike by China. 

Apple made several changes in its EU App Store policy in January 2024 to comply with DMA. The US company agreed to allow developers to distribute iOS apps through alternative marketplaces and pay a lower commission of 10% for subscriptions after the first year. 

However, the European Commission claims that Apple failed to comply with DMA as it imposed strict eligibility requirements, which made it difficult for developers to inform their users and distribute their apps through options outside of the App Store. 

Apple also introduced something called Core Technology Fee, which charges €0.50 for each first annual install per year on apps with over 1 million annual installs in the EU, even if the apps are downloaded from a third-party app marketplace. 

In the case of Meta, the European Commission found that the social media giant failed to provide a genuine choice for a less data-intensive, yet equal, free service to EU users. 

Under DMA, gatekeeper companies are required to seek user consent before linking their personal data with different services. Even if users deny consent, they should still get a comparable but less personalized service. 

In November 2023, Meta introduced a Consent or Pay advertising model, which gave Facebook and Instagram users in the EU the option to consent to data use for personalized ads or pay for a monthly ad-free subscription service. 

Apple said in a statement that it is being “unfairly targeted” and will challenge the new fine. The company added that the new rules are bad for the privacy and security of its users and is forcing it to give its technology away for free. 

Meta on its part accused the EU of forcing it to change its business model and offer an inferior service. 

“Apple and Meta have fallen short of compliance with the DMA by implementing measures that reinforce the dependence of business users and consumers on their platforms. All companies operating in the EU must follow our laws and respect European values,” said Teresa Ribera, Executive VP for Clean, Just and Competitive Transition at the European Commission. 

DMA aims to restrict gatekeeper companies such as Apple, Amazon and Google from using their dominant position in different online markets to thwart competition. It also aims to enhance user choices by allowing interoperability between social media and alternative services such as alternate payment processing and third-party app stores.  

Under the landmark law, companies with 45 million monthly users in the EU and 10,000 annual business users are deemed gatekeepers and required to follow certain rules. It gives European Commission the power to investigate business practices of tech companies and slap heavy penalties of up to 10% of their global annual turnover, which can go up to 20% for repeat violations. 

Apple and Meta have been given two months to comply with the European Commission’s decision or pay the penalty. 

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