The long-awaited first non-compliance decisions under the DMA are finally out. Apple and Meta have been fined EUR 500 and 200 million respectively. While everyone can now be relieved that DMA enforcement has not been consigned to oblivion (or turned into a counter-tariff bargaining chip), a few question marks remain. To start with the obvious: should the fines have been higher? What changes will we see after the next 60 days given to the DMA infringers and will they be enough? And has the EU been overtaken by developments elsewhere in recent weeks when it was holding on to the non-compliance decisions much longer than expected?
By the SCiDA Team
Finally! Weeks later than anticipated, the Commission has mustered its courage in the midst of the US trade vendetta and announced its historic, first non-compliance decisions under the DMA. The targeted gatekeepers: Meta and Apple. The Commission had more news up its sleeve for both, some good and some bad (depending on who you ask). While the fines and the compliance measures asked by the Commission seem rather pale in comparison to the recent calls for break-ups resounding from across the Atlantic, it is worth taking a closer look at the Commission’s first decisions of its kind. The relevant DMA provisions at the spotlight of the non-compliance decisions are Art. 5(2) DMA and Art. 5(4) DMA.
Meta Data Silos
Art. 5(2) DMA requires gatekeepers to obtain their users’ consent before combining personal data across services, and to offer them a less personalised but otherwise equivalent alternative in case they refuse. Meta’s failure to comply with its proposed “pay or consent” model was worth EUR 200 million in fines in the eyes of the Commission. The long-disputed question whether or not the required payment for the less data-intense alternative conflicts with the user’s free choice may now be decided, at least from a DMA-perspective. The Court of Justice, ruling on the German Facebook case, had left the door open for an “appropriate fee” for an equivalent alternative.
So, what’s next? We don’t know yet. The Commission did not consider Meta’s offer of a less personalised alternative for a monthly subscription to be compliant with Art. 5(2) DMA as it did not leave the user with sufficient choice. But the Commission also does not seem to be convinced by Meta’s new proposed compliance measure, which is currently under “ongoing assessment” by the Commission. The updated compliance measure has added a third option for users in addition to the binary choice between personalised ads and a paid subscription: the “less personalised ads” version (see our recent SCiDA blog for an in-depth assessment of this proposal).
Apple has to grapple
Apple, on the other hand, failed to comply with Art. 5(4) DMA – the anti-steering provision. The fines imposed on Apple for this failure to comply with Art. 5(4) DMA amounts to EUR 500 million. The Commission was not convinced by Apple’s compliance measures, which allowed apps to include so-called link-outs to alternative offers in alternative distribution channels. A nightmare for Apple – it was used to charging a hefty commission for every in-app purchase. It was therefore no surprise that the Commission spotted Apple’s Trojan horse of a compliance measure, with commercial and technical restrictions for app developers who wish to inform in-app about alternative offers hidden inside. Apple keeps dependence of its business users up and prevents multihoming of end users with regard to other sales channels than the Apple app store by making it commercially unattractive for business users to make use of their new steering-freedoms under the DMA. Key to this strategy is an updated fee structure, which is both unfair and undermines contestability, Fiona Scott Morton Jacques Crémer, David Dinielli, Paul Heidhues, Gene Kimmelman, Giorgio Monti, Margaret O’Grady, Rupprecht Podszun and Monika Schnitzer argue.
Fine Fines
Although the Commission seems to consider Apple’s compliance failure to be worse than Meta’s based on the gravity and duration of the non-compliance, at least in terms of fines, both fines are strikingly low – at least if we remember fines like the one imposed on Google in 2018, with a record high of EUR 4.34 billion, back in the good old days of Art 102 TFEU enforcement. Is Olivier Guersent right in saying the DMA “is about compliance, not fines” as Politico reports? Following this logic, Art. 102 TFEU would then be more about fines than about stopping competition law infringements. Fines should be as high as necessary to deter undertakings from engaging in anti-competitive conduct. Otherwise, non-compliance will become part of a cost-benefit calculation. Should fines be reduced to ease geopolitical tensions? Not if the EU wants to stay strong on the rule of law, Rupprecht Podszun and Monika Schnitzer argue. On the other hand, Art. 30(4) DMA requires the Commission to take into account duration, gravity and recurrence when fixing the fines. Given that we are only one year into compliance with the DMA, the Commission may simply reserve some more additional scope for future fines. The yet to be published decisions may reveal the secrets behind the Commission’s discount on fines for Apple and Meta.
But one thing is clear. The Commission has prioritised and followed the money in its first ever issued non-compliance decisions under the DMA. The Commission’s decision to target Apple’s attempts to restrict app developers from transacting outside their Apple apps and Meta’s attempts to keep users in the world of personalised ads struck at the heart of both gatekeeper’s main revenue streams. It should also be kept in mind that the DMA holds a special treat for repeat offenders. According to Art. 18(3) DMA a gatekeeper shall be deemed to have engaged in systematic non-compliance if it earned three non-compliance decisions in eight years. If so, the Commission can enter the next level and apply ever tougher sanctions, including a merger prohibition and structural remedies. Meta and Apple have made a huge leap into this direction with the non-compliance decisions this week.
Side Acts
The announcement overshadowed a handful of other developments that the Commission mentioned en passant in its press release. Here are the side acts to what happened on the main stage:
- Facebook Marketplace is off the hook and no longer designated as core platform service under the DMA. This decision comes much earlier than the regular review period of the gatekeeper status foreseen in Art. 4(2) DMA. At Meta’s request, the Commission reconsidered the quantitative threshold of business users and found that Facebook Marketplace had less than 10,000 business users in 2024, due to Meta’s efforts to restrict B2C use of the marketplace.
- For Apple, there were more bad news. While the Commission decided to close its investigation under the user choice obligation of Art. 6(3) DMA, it announced another preliminary finding of Apple’s non-compliance with the DMA. This time, effective compliance with Art. 6(4) DMA is at stake. The provision requires gatekeepers to allow alternative app distribution. Apple must allow apps on its devices via channels other than its own App Store, such as other, third-party app stores or direct downloads from the web. Apple, fearing for its App Store commissions, has implemented a deterrent strategy, according to the Commission. The gatekeeper has introduced contractual terms for alternative app distribution that include a new Core Technology Fee and strict eligibility requirements.
Make US Antitrust Great Again
So far, Apple holds the trophy for the least compliant gatekeeper, with one non-compliance decision for its anti-steering practices (Art. 5(4) DMA), one ongoing investigation with preliminary findings for its contractual terms for alternative distribution (Art. 6(4) DMA) and a little help from the Commission for its compliance with the vertical interoperability obligation by specifying the measures Apple has to take to comply with Art. 6(7) DMA. But perhaps not for long, if the Commission decides to use its now freed-up capacities elsewhere. The list confirms the impression held by some that Apple was taking the most confrontative stance in DMA compliance (and those present at the initial workshops in March 2024 may remember the difference in tone from Apple representatives as opposed to smoothies from other gatekeepers). Maybe it pays off to at least pretend to make an effort.
While the Commission has finally imposed fines in very measured doses after weeks of hesitation, US antitrust enforcement against Big Tech seems to have entered the stage with a wrecking ball again, at least as far as the demand for remedies is concerned. Where a few weeks ago the main line seemed to be that great American companies needed protection from European protectionism, break-ups of Google’s Chrome and Ad Services and Meta’s WhatsApp and Instagram are suddenly on the table.
A week ago, a U.S. District Court has ruled in favour of the U.S. Department of Justice, saying that Alphabet had violated U.S. competition law by monopolising online advertising markets. The DoJ sought the break-up of the Google Ad Manager suite in its complaint. A remedy decision is still pending. The same applies to the pending decision on a potential divestiture of Chrome or Android in the DoJ’s parallel Google search case. But Meta is also on trial and facing structural remedies for allegedly violating U.S. antitrust laws by acquiring WhatsApp and Instagram more than a decade ago, pursuing an anticompetitive “better-buy-than-compete” strategy.
Comparing the US approach to the EU DMA enforcement raises questions of a more pedagogical nature: To achieve fair and contestable digital markets and restore competition, is it better to take many small steps towards a perfect world of effective compliance with the law? Or does a steamroller approach works best, where threats of break-up will force Big Tech to make more generous commitments? Signals from the United States administration are mixed: The administration did not stop the on-going anti-Big Tech-cases but complain about the DMA. The President fired (illegally, it is said) the two democratic commissioners from the FTC, but his latest addition to the FTC, Commissioner Mark Meador, is labelled pro-enforcement and anti-Google according to Bloomberg, cited by Wikipedia.
Germany’s 19a and the comeback of 102
So, while the EU moves on, but with weak fines, and the US sends mixed signals, the Germans have been active, too. But Andreas Mundt’s 19a-teams have been unexpectedly polite in the Bundeskartellamt’s announcements of the closure of its case against Alphabet. The “Amt” settled a case against Alphabet relating to its Google Automotive Services and Google Maps accepting commitments to licence the Google services included in Google Automotive Services individually and to remove other restrictive contractual arrangements that incentivise the use of Google services. Acknowledging the Bundeskartellamt’s difficult balancing act between enforcing Sec. 19a GWB effectively and not interfering with DMA enforcement, the lack of confrontational decisions raises doubts about the clout and impact of Sec.19a GWB.
But you never know how things play out. Article 102 TFEU, a provision that we had considered half-dead for digital after the advent of the DMA, is back with a loud roar: The European Court of Justice held in the Android Auto case that apps may claim access to platforms under eased conditions. You do not need to fulfil the criteria from the legendary Bronner case if you wish to be part of the ecosystem. In the case, Alphabet had not granted access to Android Auto (running the in-car software system) for JuicePass, an app showing charging stations. There is a duty for interoperability if this makes the app more attractive, so the court says. The ruling is considered to be far-reaching. Andreas Heinemann, expert on such cases in Europe and a former head of the Swiss competition commission, called the case “remarkable” and says that it clearly establishes a new group of cases, namely refusal of interoperability.
Microsoft Outlook
Apple and Meta now have 60 days to comply with Art. 5(2) and Art. 5(4) DMA. But will we see any real change in their behaviour, or will the non-compliant gatekeepers hold out? Both Apple and Meta have announced that they will appeal the Commission’s non-compliance decision. While appeals do not suspend the obligation to comply with non-compliance decisions under the DMA under Art. 278 TFEU, small fines may. It will then be up to the Commission to increase the pressure by raising the level of fines through periodic penalty payments. In the meantime, things to look out for include U.S. reactions to the Commission’s decisions as well as the non-compliance decision against Alphabet’s self-preferencing tactics, which is close to overdue.
This blogpost was brought to you by the SCiDA team. If you don’t want to miss any of our future blogs, just subscribe to our newsletter here. And if you liked this post – share it with your friends & on social media. SCiDA stands for “Shaping Competition in the Digital Age”. It is a joint research project of the Universities of Düsseldorf and Exeter, funded by the two independent research funding organisations DFG and AHRC.
