By Foo Yun Chee and Jan Strupczewski

BRUSSELS (Reuters) -Apple was fined 500 million euros ($570 million) on Wednesday and Meta 200 million euros, as European Union antitrust regulators handed out the first sanctions under landmark legislation aimed at curbing the power of Big Tech.

The EU fines could stoke tensions with U.S. President Donald Trump who has threatened to levy tariffs against countries that penalise U.S. companies.

They follow a year-long investigation by the European Commission, the EU executive, into whether the companies comply with the Digital Markets Act (DMA) that seeks to allow smaller rivals into markets dominated by the biggest companies.

The fines signal that the EU is sticking to its guns in enforcing the new rules, which were introduced in 2023. That is despite Trump citing the DMA while vowing in February to "defend American companies and innovators from overseas extortion".

Alphabet's Google and Elon Musk's X are also facing potential fines from European regulators.

The EU will be encouraged by a U.S. court judgment earlier this month which found that Google illegally dominates two markets for online advertising technology, Commission sources say. That ruling could pave the way for U.S. antitrust prosecutors to seek a breakup of its ad products.

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 also 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," its Chief Global Affairs Officer Joel Kaplan said in an emailed statement.

"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."

The fines are modest compared to the penalties meted out by the previous EU antitrust chief Margrethe Vestager during her term. Sources, speaking on condition of anonymity, have said this is due to the short period of the breaches, a focus on compliance rather than sanctions, and a desire to avoid possible retaliation from Trump.

PAY-OR-CONSENT MODEL

The EU competition watchdog said Apple must remove technical and commercial restrictions that prevent app developers from steering users to cheaper deals outside the App Store.

It said Meta's pay-or-consent model introduced in November 2023 breached the DMA in the period up to November 2024, when it tweaked it to use less personal data for targeted advertising.

The model gives Facebook and Instagram users who consent to be tracked a free service that is funded by advertising revenues. Alternatively, they can pay for an ad-free service.

Meta is discussing with the EU the new version introduced in November last year to see if it is DMA compliant. The companies have two months to comply with the orders or risk daily fines.

Apple avoided a fine in a separate investigation into its browser options on iPhones after making changes that allow users to switch to a rival browser or search engine more easily. Regulators said these comply with the DMA and closed the investigation on Wednesday.

The iPhone maker was still charged with breaching DMA rules on the grounds it hindered users from sideloading, a practice that involves downloading alternative app stores and apps from the web.

Regulators criticised Apple's conditions, which include a new fee called Apple's Core Technology Fee, saying these serve as a disincentive for developers to use alternative app distribution channels on its mobile operating system iOS.

The EU regulator also dropped Meta's Marketplace's designation as a DMA gatekeeper because the number of users fell below the required threshold.

"We have taken firm but balanced enforcement action against both companies, based on clear and predictable rules. All companies operating in the EU must follow our laws and respect European values," EU antitrust chief Teresa Ribera said.

EU lawmaker Andreas Schwab urged the Commission to maintain its investigations against Google's lucrative adtech business and Elon Musk's X and not delay decisions.

"There can be no leeway in enforcement as this may also impact the importance of competition policy in general," he said, adding a decision that was apparently linked to trade policy issues was "dangerous for the whole European Union construction".

Reuters had flagged the EU decisions on Apple and Meta last month.

($1 = 0.8773 euros)

(Reporting by Foo Yun Chee; editing by Barbara Lewis and Jan Harvey)