Brussels Softens DMA Penalties for Apple and Meta Amid US Concerns

The European Union is set to impose reduced fines on tech giants Apple and Meta as part of its enforcement of the Digital Markets Act (DMA), a move intended to prevent escalating tensions with the United States, according to the Financial Times.

While the European Commission initiated DMA-related investigations into Apple, Meta, and Google last March, the latest reports indicate that the fines for the companies will be significantly lower than the maximum penalty of 10% of their global annual turnover. Despite the reduced financial penalties, the European Commission is still expected to enforce modifications to their services to ensure compliance with the new regulations.

According to the Financial Times, Apple is anticipated to be fined and required to revise its App Store rules following an investigation into whether the company’s policies unfairly prevent app developers from directing consumers to external offers outside its platform. However, regulators are expected to drop another inquiry into Apple’s web browser choice screen without imposing any further sanctions.

Meta is also set to face a fine and will be ordered to alter its controversial “pay or consent” model, which currently forces users to either accept data tracking for targeted advertising or pay a subscription fee for an ad-free experience. The model has faced criticism for restricting users’ ability to access services without compromising their privacy.

Related: EU Poised to Fine Meta Up to $1 Billion for Alleged Antitrust Violations: Report

Under the DMA, companies can theoretically be fined up to 10% of their global turnover, which could amount to billions of dollars in penalties for major firms. However, according to three officials cited by the Financial Times, the European Commission is aiming for significantly lower fines, recognizing that the DMA is still in its early stages and that any penalties could be subject to legal challenges.

The softened penalties reflect Brussels’ attempt to implement the DMA while avoiding a full-blown confrontation with Washington. The new European Commission, which took office in December, appears to be prioritizing ensuring Big Tech’s compliance with the DMA over imposing massive fines, officials told the Financial Times.

Brussels regulators are also expected to drop a case against Apple regarding whether its operating system discourages users from switching browsers or search engines. Apple has already introduced changes in response to EU regulatory scrutiny, which has likely influenced the decision to forgo additional sanctions.

Any punitive measures against major US tech firms carry the risk of diplomatic backlash. Former US President Donald Trump previously criticized EU penalties on American companies, labeling them a “form of taxation” and likening the fines to “overseas extortion.” According to the Financial Times, this remains a sensitive issue, as the US has warned of potential tariffs on countries that impose digital services taxes on American firms.

“This is a crucial test for the commission,” an individual from one of the affected companies stated. “Further targeting of US tech firms will heighten transatlantic tensions and provoke retaliatory actions, and, ultimately, it’s member states and European businesses that will bear the cost.”

Source: The Financial Times