Apple & Meta Fined for Breaching Digital Markets Act

Key Takeaways

• Apple Fined €500 Million: Apple breached the Digital Markets Act by restricting app developers from informing customers about alternative, cheaper offers outside the App Store.
• Meta Fined €200 Million: Meta violated the DMA by offering a "Consent or Pay" model that didn't provide EU users with the option to choose services using less personal data.
• Facebook Marketplace Removed from DMA Designation: Meta's Facebook Marketplace is no longer considered a significant business-to-consumer platform after the Commission reviewed its impact.
• 60 Days to Comply: Both Apple and Meta must comply with the Commission's orders or face further penalties.

Deep Dive

The European Commission has hit two of the world’s biggest tech companies, Apple and Meta, with massive fines for failing to comply with key obligations under the Digital Markets Act (DMA), a regulation designed to level the playing field in Europe’s digital landscape. Apple has been fined €500 million, while Meta faces a €200 million penalty, as the Commission accuses them of undermining fair competition and consumer choice in different ways.

Apple, renowned for its iconic App Store, was found to be preventing app developers from fully informing customers about cheaper alternatives to its marketplace. Under the DMA, app developers should be able to direct users to alternative offers outside of the App Store, something that Apple had restricted. The result? Developers couldn’t steer customers to better or more affordable options, and consumers missed out on the chance to make informed choices.

The Commission found Apple’s restrictive practices unjustifiable and ruled that these moves weren’t necessary or proportionate. In other words, Apple was stifling competition without a good reason.

Now, Apple is required to lift these restrictions, giving developers the freedom to communicate alternatives directly to customers. If the company doesn’t comply within 60 days, they risk facing further penalties.

Meta's “Consent or Pay” Dilemma

Meanwhile, Meta’s “Consent or Pay” model on Facebook and Instagram got the Commission’s attention, and not in a good way. The company had presented EU users with a stark choice: agree to share your personal data for targeted ads or pay a subscription fee for an ad-free experience.

The problem? The DMA requires that companies give users the option to choose a service that uses less personal data but still delivers a service of equivalent value. Meta’s binary model didn’t offer that choice, making users feel cornered into a decision. The Commission said this violated the DMA’s rules, which are all about giving users more control over their data without penalizing them for wanting privacy.

Since the investigation began, Meta has tried to make amends by introducing a new ads model that claims to use less personal data. The Commission is still assessing whether this new approach meets the DMA’s standards, but for now, Meta is being held accountable for its previous non-compliance.

The Facebook Marketplace Twist

In a twist, Meta’s Facebook Marketplace has been removed from the DMA's oversight list. Originally designated under the DMA as a platform with significant influence over business-to-consumer interactions, the Commission decided that Marketplace no longer met the necessary criteria after a careful review. With fewer than 10,000 business users in 2024, Marketplace doesn’t pose the same threat to fair competition that it once did.

Apple and Meta have 60 days to comply with the Commission’s orders. If they don’t, they could face further fines. The Commission will continue to monitor their actions, ensuring that the Digital Markets Act is respected across the board.

In reaction to today’s enforcement decisions, Teresa Ribera, Executive Vice-President for Clean, Just, and Competitive Transition, made it clear that these actions reflect the Commission’s commitment to safeguarding consumers and promoting fair competition.

“These decisions send a strong and clear message,” Ribera said. “The Digital Markets Act is a crucial instrument to unlock potential, choice, and growth by ensuring digital players can operate in contestable and fair markets.”

Henna Virkkunen, Executive Vice-President for Tech Sovereignty, Security, and Democracy, echoed this sentiment, stressing that the DMA’s core principle is giving consumers control over their data and ensuring businesses can freely communicate with their customers.

The fines and decisions are the first of their kind under the DMA, marking a significant milestone for European digital regulation. Apple and Meta now face a clear challenge to comply with the Commission’s orders or risk the consequences. For consumers and businesses alike, this is a step forward in ensuring a fairer, more transparent digital market.

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