EC Slams Apple, Meta With Fines for Breaching Digital Markets Act
Apple and Meta violated the EU Digital Markets Act (DMA), the European Commission said Wednesday in its first noncompliance decisions under the measure. It hit Apple with a $568 million (500 million euros) fine and Meta with $227 million (200 million euros). Neither company commented immediately.
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The penalties won cheers from a European Parliament committee and consumer groups. European Digital Rights, however, said that while the EC showed "some teeth," the fines are too low and the companies may be "playing compliance games." The tech industry complained about inconsistent enforcement.
The EC found that Apple breached its anti-steering obligation under the DMA. The law requires that app developers distributing their apps via Apple's App Store be able to inform customers, free of charge, of alternative offers outside the App Store, steer them to those offers and allow them to make purchases, the EC said.
Apple failed to comply with the requirements by placing so many restrictions on app developers that they can't fully benefit from the advantage of such alternative distribution channels outside the App Store, the EC said. Similarly, consumers can't fully benefit from different and cheaper offers because Apple prevents developers from informing them. Apple has "failed to demonstrate that these restrictions are objectively necessary and proportionate."
The EC ordered Apple to remove the technical and commercial restrictions on steering and to stop perpetuating its noncompliant conduct in the future.
The DMA also requires that gatekeepers seek users' consent for combining their personal data between services, the EC noted. Users who don't consent must have access to a less personalized but equivalent alternative.
Meta's "Consent of Pay" advertising model, introduced in November 2023, forces EU Facebook and Instagram users to choose between consenting to personal data use for personalized ads or paying a monthly subscription for an ad-free service, the EC said.
That model doesn't comply with the DMA because it doesn't give users the required specific choice to opt for a service that uses less of their personal data but is otherwise equivalent to the "personalized ads" service, the EC said. The model also doesn't let users exercise their right to freely consent to the combination of their personal data.
Meta introduced another version of its free personalized ads model last November, offering a new option that allegedly uses less personal data to display ads, the EC noted. It's now assessing that option, but Wednesday's decision concerns the time period during which EU end users were offered only consent or pay options (March to November 2024).
Apple and Meta must comply with the decisions within 60 days or risk periodic penalty payments, the EC said.
The Meta decision "is by no means the start of a 'tech war' in response to Trump's erratic tariff policy," said European Parliament Internal Market and Consumer Protection Chair Anna Cavazzini, a German member of the Greens/European Free Alliance Party. "Instead, it is the consistent implementation of existing EU law."
The decisions are important "to show Big Tech that if they choose to operate on the EU's Single Market they must play by our rules," said Agustin Reyna, director general of the European Consumer Organisation.
Daniel Friedlaender, the Computer & Communications Industry Association's Europe senior vice president, said the DMA's "credibility is being weakened by its unpredictable enforcement and shifting demands." He accused the EC of, in one case, prescribing highly technical decisions on business strategy and product engineering, while in the other, risking higher advertising costs and creating new roadblocks for European brands and small and midsized companies trying to connect with customers across the EU.
The "long-awaited" decisions challenge the "stronghold of Big Tech platforms exerting too much power over our rights and over the flow of information in society," European Digital Rights said. The penalties, however, are a "pittance."
Joe Jones, IAPP's director-research and insights said via email that "the fines land at a time of heightened scrutiny by the current U.S. Administration on the application of EU laws to U.S. companies." Open questions now include not only how companies will respond to EU regulatory enforcement, but how overseas governments react, he added.