BREAKINGVIEWS-EU’s Big Tech softball may yet become hardball

By George Hay

LONDON, April 23 (Reuters Breakingviews) - There are two ways to look at Ursula von der Leyen’s relatively softball fines for U.S. Big Tech. One is that Wednesday’s 500 million euro and 200 million euro hit for Apple AAPL.O and Meta Platforms META.O respectively means that the European Commission president has buckled amid pressure from her opposite number, Donald Trump. The other is that the penalties for anti-competitive behaviour aren’t hugely different to what the European Union would have meted out anyway, and don’t necessarily reflect how aggressively it will target the sector in future. On balance, the latter interpretation is more plausible.

Granted, the new fines are small beer compared to the 4.3 billion euro hit bestowed on Google in 2018 by former EU antitrust tsar Margrethe Vestager. Meanwhile, in March 2024 Apple was fined 1.8 billion euros for abusing its dominant position in the distribution of music streaming apps to iPhone users – a similar area to its latest Brussels penalty. Given that the latest hits under the EU’s Digital Markets Act theoretically enable the bloc to fine miscreants 10% of their revenues – $16 billion in Meta’s case – it may look like von der Leyen has watered down a key piece of legislation, perhaps to persuade Trump to ditch his plan for 20% reciprocal tariffs on EU trade.

The nuance here is important, though. The DMA, which went live in 2023, is a different beast to Vestager-era antitrust thwacks, which tended to follow lengthy court cases covering even lengthier misdemeanour periods. It’s also intended to encourage Big Tech “gatekeepers” to open up their services to smaller competitors by setting fines that only ratchet up if rules are persistently broken. Had von der Leyen leant into the process and randomly turned the penalty dial up to the max, it would have compromised the DMA’s desired status as the gold standard for regulating tech companies.

One risk is that the European Commission chief looks weak in the face of Trump’s aggression. Yet in some ways she has used her leeway to delay the timing of the DMA fines effectively. Had they landed as planned just before the U.S. president’s reciprocal tariffs on April 2, it could have inflamed an already volatile situation. A few weeks later, amid a landmark U.S. court ruling against Google that could force owner Alphabet GOOGL.O to break it up, the fines may make less of a sensation.

Either way, von der Leyen has already publicly floated other ways to target Big Tech and counter Trump’s tariffs. One non-DMA route would be to encourage member states to levy higher taxes on Big Tech digital advertising revenue. Even if Brussels did exploit some of the DMA’s grey areas to pull its punches, it has more in its locker.

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CONTEXT NEWS

The European Union fined Apple 500 million euros ($570 million) and Meta 200 million euros on April 23, the first sanctions under its Digital Markets Act aimed at curbing the power of Big Tech.

The sanctions follow a year-long investigation by the European Commission, the EU executive, into whether the companies comply with the DMA that seeks to allow smaller rivals into markets dominated by the biggest companies.

Apple said it would challenge the EU fine.

“Today’s announcements are yet another example of the European Commission unfairly targeting Apple in a series of decisions that are bad for the privacy and security of our users, bad for products, and force us to give away our technology for free,” Apple said in an emailed statement.

Meta criticised the EU decision.

“The European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards,” it said.

“This isn’t just about a fine; the Commission forcing us to change our business model effectively imposes a multi-billion-dollar tariff on Meta while requiring us to offer an inferior service.”