Explainer-What happens to Apple and Meta after the EU fine?

By Supantha Mukherjee

STOCKHOLM (Reuters) -European Union antitrust regulators on Wednesday fined Apple 500 million euros ($570 million) and Meta 200 million euros to make the companies comply with the Digital Markets Act, which seeks to allow smaller rivals into markets dominated by the biggest companies.

The fines follow a year-long investigation by the European Commission.

WHY WAS APPLE FINED?

The DMA required Apple to allow developers to send customers outside apps to make purchases, and find other app distribution channels, free of charge in order to avoid the fees Apple typically charges apps developers on its platform.

The Commission found that the restrictions imposed by Apple kept app developers away from the advantages of alternative distribution channels outside the App Store. 

Similarly, consumers were largely kept in the dark about these alternative and cheaper offers as Apple prevents app developers from directly informing consumers of such offers.

The Commission said Apple failed to demonstrate that the restrictions are objectively necessary and proportionate.

Regulators criticised Apple's conditions, which included adding a new fee, saying these make it unattractive for developers to use alternative app distribution channels such as the one provided by Epic Games.

Apple said it would challenge the EU fine.

WHAT CHANGES COULD COME?    

Now Apple would have to remove technical and commercial restrictions that prevent app developers from steering users to cheaper deals outside the App Store.

Apple has 60 days to comply with the Commission's decisions or risk periodic penalty payments.

That would likely lead to a cheaper price for apps that consumers can directly download from outside Apple's store. 

App developers would also benefit as they would not have to pay Apple if they host their apps on outside stores. 

"Today's decision benefits all developers - European developers and American developers alike," Epic Games CEO Tim Sweeney said. 

WHY WAS META FINED?

Meta introduced a "Consent or Pay" model in November 2023 which gives Facebook and Instagram users who consent to be tracked a free service that is funded by advertising revenue. 

To avoid ads altogether, Meta charges 5.99 euros per month on the Web and 7.99 euros per month on its apps.

The Commission said the model did not comply with DMA rules as users had fewer choices on how their data was used.

The fine relates to the time period between March 2024, when the DMA obligations became legally binding, and November 2024, when Meta introduced a new ad model.

"The Commission (is) forcing us to change our business model, effectively imposing a multi-billion-dollar tariff on Meta while requiring us to offer an inferior service," Meta said in an emailed statement.

WHAT HAPPENS NEXT?

After numerous exchanges with the Commission, Meta introduced another version of the free personalised ad model in November last year, offering a new option that uses less personal data to display advertisements. 

The Commission is currently assessing this new option and continues its dialogue with Meta, requesting the company to provide evidence of the impact of this new "less ads" model in practice.

The "less ads" option was supposed to make the system legal, but it has massive usability issues, said Austrian privacy activist Max Schrems, who has repeatedly sued Meta for alleged breaches of the EU's privacy law. 

Users are forced into "ad breaks" that prevent them from scrolling through their feed until a timer runs out and Meta nudges users into choosing the fully personalised option, he said.

(Reporting by Supantha Mukherjee in Stockholm; Editing by Matthew Lewis)