The European Union hits Apple and Meta with 700 million euros in fines, first under digital rules

The Meta logo is seen at the Vivatech show in Paris, France, June 14, 2023. (AP Photo/Thibault Camus, File)

LONDON — European Union watchdogs fined Apple and Meta hundreds of millions of euros Wednesday as they stepped up enforcement of the 27-nation bloc’s digital competition rules.

The European Commission imposed a 500 million euro (US$571 million) fine on Apple for preventing app makers from pointing users to cheaper options outside its App Store.

The commission, which is the EU’s executive arm, also fined Meta Platforms 200 million euros because it forced Facebook and Instagram users to choose between seeing personalized ads or paying to avoid them.

The punishments were smaller than the blockbuster multibillion-euro fines that the commission has previously slapped on Big Tech companies in antitrustcases.

Apple and Meta have to comply with the decisions within 60 days or risk unspecified “periodic penalty payments,” the commission said.

The decisions were expected to come in March, but the self-imposed deadline slipped amid an escalating trans-Atlantic trade war with U.S. President Donald Trump, who has repeatedly complained about regulations from Brussels affecting American companies.

The penalties were the first issued under the EU’s Digital Markets Act, also known as the DMA. It’s a sweeping rule book that amounts to a set of do’s and don’ts designed to give consumers and businesses more choice and prevent Big Tech “gatekeepers” from cornering digital markets.

The DMA seeks to ensure “that citizens have full control over when and how their data is used online, and businesses can freely communicate with their own customers,” Henna Virkkunen, the commission’s executive vice president for tech sovereignty, said in a statement.

“The decisions adopted today find that both Apple and Meta have taken away this free choice from their users and are required to change their behavior,” Virkkunen said.

Both companies indicated they would appeal.

Apple accused the commission of “unfairly targeting” the iPhone maker, and said it “continues to move the goalposts” despite the company’s efforts to comply with the rules.

Meta chief global affairs officer Joel Kaplan said in a statement that the “Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards.”

In a press briefing in Brussels, commission spokespeople sought to tamp down concerns that the penalties would inflame trade tensions.

“We don’t care who owns a company. We don’t care where the company is located,” commission spokesperson Thomas Regnier told reporters. “We are totally agnostic on that front.”

“And be it a Chinese company, be an American company, or be it a European company, you will have to play by the rules in the European Union.”

In the App Store case, the Commission had accused the iPhone maker of imposing unfair rules preventing app developers from freely steering consumers to other channels.

Among the DMA’s provisions are requirements to let developers inform customers of cheaper purchasing options and direct them to those offers.

The commission said it ordered Apple to remove technical and commercial restrictions that prevent developers from steering users to other channels, and to end “noncompliant” conduct.

Apple said it has “spent hundreds of thousands of engineering hours and made dozens of changes to comply with this law, none of which our users have asked for.”

“Despite countless meetings, the Commission continues to move the goalposts every step of the way,” the company said.

The EU’s Meta investigation centered on the company’s strategy to comply with strict European data privacy rules by giving users the option of paying for ad-free versions of Facebook and Instagram.

Users could pay at least 10 euros (US$11.40) a month to avoid being targeted by ads based on their personal data. The U.S. tech giant rolled out the option after the European Union’s top court ruled Meta must first get consent before showing ads to users.

Regulators took issue with Meta’s model, saying it doesn’t allow users to exercise their right to “freely consent” to allowing their personal data from its various services, which also including Facebook Marketplace, WhatsApp, and Messenger, to be combined for personalized ads.

Meta rolled out a third option in November giving Facebook and Instagram users in Europe the choice to see fewer personalized ads if they don’t want to pay for an ad-free subscription. The commission said it’s “currently assessing” this option and continues to hold talks with Meta, and has asked the company to provide evidence of the new option’s impact.

“This isn’t just about a fine; the Commission forcing us to change our business model effectively imposes a multibillion-dollar tariff on Meta while requiring us to offer an inferior service,” Kaplan said. ”And by unfairly restricting personalized advertising the European Commission is also hurting European businesses and economies.”

The EU has already sanctioned Apple under the DMA, but it didn’t involve a fine. The bloc took action earlier this year to compel the company to open up its iPhone and iPad operating systems by outlining the steps it must take to work better with competing technologies.

Article written by Kelvin Chan, The Associated Press