The European Commission has cracked down on tech giants Apple and Meta for violating the Digital Markets Act (DMA), a law that came into effect in 2023. After a year-long investigation, the Commission concluded that both companies failed to comply with the DMA’s requirements.
Apple’s App Store Restrictions
Apple’s App Store policies have been under scrutiny for restricting developers from promoting alternative distribution channels. The DMA mandates that app developers be allowed to inform customers about offers outside the App Store, direct them to these offers, and enable them to make purchases. However, Apple’s restrictions prevented developers from fully benefiting from alternative channels, and consumers from accessing cheaper alternatives. The Commission has ordered Apple to lift these restrictions and avoid similar practices in the future. The fine imposed on Apple takes into account the severity and duration of the non-compliance.
The DMA requires tech giants to obtain user consent before combining their personal data across services. Users who refuse consent must have access to a less personalized but equivalent alternative. Meta introduced a binary advertising model in November 2023, offering users a choice between consenting to data combination for personalized ads or paying a monthly subscription for an ad-free service.
Meta’s Advertising Model
The Commission deemed this model non-compliant with the DMA, as it didn’t provide users with the required option to choose a service that used fewer personal data but was otherwise equivalent to the personalized ads service. Meta has since introduced a new version of its advertising model, offering a supposedly less data-intensive option. The Commission is currently evaluating this new option and has asked Meta to provide evidence of its practical impact.
Teresa Ribera, Vice-President of the European Commission, emphasized that the DMA is crucial for promoting competition, choice, and growth in digital markets. She stated that the Commission’s decisions send a clear message that digital players must operate in fair and competitive markets, protecting European consumers and ensuring a level playing field. The fines imposed on Apple and Meta are significantly lower than the maximum allowed under the DMA, which is 10% of their global turnover. The Commission justified the lower fines by citing the “very short” period of non-compliance and the fact that these are the first sanctions under the DMA.
The Commission has given Apple and Meta 60 days to comply with the DMA. If they fail to do so, Brussels may impose additional fines.