Apple & Meta breaching the EU Digital Markets Act?

Stine Mangor Tornmark
Written by
Stine Mangor Tornmark
July 9, 2024

What's happening?

Apple and Meta are currently under intense scrutiny for alleged breaches of the EU Digital Markets Act (DMA). This new EU law focuses on ensuring fair competition in the digital market.

Both Apple and Meta are classified as 'gatekeepers' under the DMA, meaning that they’re subject to stricter regulations aimed at preventing monopolistic practices.

According to the European Commission, these two gatekeepers have been imposing terms of services that allow them to collect vast amounts of personal data from their users. This data collection has given them significant advantages over competitors, making it difficult for others to compete in terms of providing online advertising and social network services.

Apple under fire

Apple is currently under scrutiny primarily for its practices within the App Store. The Commission has launched investigations into allegations that Apple's policies provide it with an unfair advantage over app developers.

Central to these concerns is the Commission's argument that Apple's stringent control over the App Store ecosystem limits competition and innovation. By enforcing strict guidelines, fees, and exclusive features for its own apps, Apple may be favoring its services and products over those of competitors.

This has sparked significant debate about fairness and market dominance in the digital marketplace, leading regulators to closely examine Apple's practices.

Meta's 'pay or consent' model

Meta is once again under regulatory scrutiny. According to the Commission's preliminary assessment, Meta's approach to personalised ads (known as the 'pay or consent' model, violates the DMA. This law requires that users have the option to decide whether their data can be collected and used for targeted ads.

Since November last year, Meta has argued its compliance by offering Facebook and Instagram users in the EU a choice: agree to tracking and personalised ads or pay a monthly fee for an ad-free experience.

However, the Commission views Meta's policy as failing to offer users a genuine alternative to personalised ads. This highlights ongoing concerns regarding user privacy and choice in Meta’s advertising practices.

What's next?

Apple and Meta now have the opportunity to respond to these findings before the Commission reaches a final decision, expected next year. If the preliminary views are confirmed, the companies could face fines of up to 10% of their global revenue — or even 20% for repeated breaches — amounting to billions of dollars in penalties. The outcomes of these investigations will not only impact Apple and Meta but also set crucial precedents for how digital market regulations are enforced across Europe.

AI features on hold

In response to regulatory challenges in the EU, both Apple and Meta have chosen to suspend the rollout of certain AI features in the region. Meta is pausing the release of its AI model, LLama, while Apple has announced that Apple Intelligence will not be available in the EU upon its launch later in 2024.

As mentioned in our previous newsletter, Meta's AI features received significant criticism across the EU for plans to use Facebook and Instagram content to train AI models without user consent. Safe to say, Meta's decision to postpone this rollout has come as a relief to many European users.

However, the choice to pause the introduction of AI features could also be viewed as an attempt by Big Tech to influence regulatory decisions. This raises concerns that EU users could potentially miss out on the latest AI innovations due to digital regulations.

Let's hope that AI progress and EU regulations can find a balance, ensuring fair use for everyone

All the best,

Stine, Ausra and the Openli Team