Another day, another European Commission fine against Big Tech — a phenomenon Silicon Valley views as little more than a speeding ticket. However, Wednesday’s modest penalties against Apple Inc and Meta Platforms Inc, totaling 700 million euros (US$795.48 million), belie a more meaningful smackdown by the continent’s antitrust regulator that could force them to rewire their business models.
Assuming the administration of US President Donald Trump pays more attention to the headline numbers than the fine print, the commission might have cleverly threaded the needle: Avoid provoking Trump as he threatens tariffs, while forcing Silicon Valley giants to change their behavior.
Apple, for instance, cannot just pay the fine and go back to doing business as usual. The commission said it breached the rule that requires app developers to inform their users about how to make purchases outside of Apple’s App Store without any further fees or restrictions. Now it is been ordered to let iPhone users in the EU install apps from sources outside the App Store, access alternative payment methods and connect iPhones more easily with non-Apple devices and services. That creates a fracture in Apple’s tightly controlled walled garden.
Meta’s problem was the “pay or consent” model it set up in Europe to half-heartedly comply with the EU’s omnibus law, known as the Digital Markets Act (DMA), in late 2023. The law states that online platforms must give their users a choice between having their personal data tracked for advertising, or not. Meta’s answer was a pop-up window on Facebook and Instagram that invited you to keep using the site for free with ads or pay a monthly subscription to make the ads go away.
That smelled coercive to the Europeans, who said users should not have to pay to avoid being tracked. There should be an option where Facebook and Instagram were still free, but personal data was not being harvested for targeted ads. That is what Meta chief global affairs officer Joel Kaplan was referring to on Wednesday when he complained that the commission was “requiring us to offer an inferior service.”
Kaplan, of course, did not elaborate on why not being relentlessly tracked on Facebook is anything other than an upgrade. Targeted ads on social media are primarily good for the revenue of social media companies, no matter how much they insist their users want to be “served relevant ads.” Recent research has shown they barely matter to consumers either. Now Meta must redesign its whole process of asking to track users to give them a proper choice, or face more penalties.
The orders strike at the heart of Apple’s closed ecosystem for the App Store and Meta’s data-driven advertising engine, and it is the first time the teeth behind the DMA have been bared. Under the new law, the commission is going beyond financial penalties to dictate product changes.
“The message that ‘You have to change’ is much more important than any fine, because it’s impacting their business models,” EDHEC Business School law professor Anne Witt said.
The question now is how the White House would react and how Meta and Apple would comply. The two have contested the commission’s findings and vowed to appeal, but the clock is ticking. They have 60 days to obey, or risk additional daily fines that could quickly dwarf the initial penalties. However, even if the relatively low fines are seen as a nod to Trump’s sensitivities, the structural demands the EU is making shows it is not backing down on its regulatory ambitions, even in the midst of trade tensions.
Google might be the next giant to feel the DMA’s sting. A decision is pending over alleged self-preferencing in Google search results.
It is a do-over of the Google shopping case that the commission took seven years to investigate, which was first brought by the British firm Foundem in 2009, but was followed by endless appeals, Witt said.
“Now they’re going after them under the DMA,” she said.
Europe has written a blueprint that forces even the mightiest tech titans to play by new rules. The era of the speeding ticket might well be over.
Parmy Olson is a Bloomberg Opinion columnist covering technology. A former reporter for the Wall Street Journal and Forbes, she is author of Supremacy: AI, ChatGPT and the Race That Will Change the World.
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