Apple’s EU fight is transatlantic tension in a nutshell

BRUSSELS ― The EU and Apple are locked in a high-stakes standoff ― and the European Commission has just ratcheted up the heat.

The EU executive announced on Wednesday it was slapping the U.S. iPhone-maker with a €500 million fine because of the way its App Store works. It's the latest in a long line of shots EU regulators have fired at the U.S. firm over the past few years, and comes amid huge transatlantic tension after President Donald Trump's move to impose tariffs.

An onslaught of decisions has led Apple to accuse the EU executive of “unfairly targeting” it. “Despite countless meetings, the Commission continues to move the goal posts every step of the way,” said Apple spokesperson Emma Wilson in a statement.

Last year, the Commission hit Apple with a €1.8 billion fine for the same conduct that was penalized on Wednesday and, also last year, ordered the company to cough up €13 billion in unpaid Irish taxes after a long-running court case.

“There’s a philosophical difference between Apple and the Commission here that is making it very difficult for Apple to compromise,” said Zach Meyers, research director at the Centre on Regulation in Europe (CERRE), a Brussels-based think tank.

The fight over Apple, a company worth almost $4 trillion, has become symbolic of the clash between the U.S. and EU. While the Digital Markets Act (DMA), under which the Commission imposed Wednesday's fine, is aimed at limiting the dominance of the biggest tech firms ― most of which happen to be American ― Trump sees them as a tool to strangle U.S. industry.

Wednesday's action follows a 90-day suspension of Trump’s "reciprocal" tariffs, as the two sides seek to ease tension. The Commission couldn't escape accusations that the timing of the decision, if not more, was influenced by the trade tensions.

Still, the U.S. announcement in February that it would scrutinize the EU’s digital laws, including the DMA, to see if they amount to a non-tariff barrier, has not been a factor in the Commission’s decision-making, according to a senior official.

The June 22 deadline given to Apple to comply with Wednesday's decision, after which the Commission can begin to issue daily fines, will come a few weeks before the expiry of the 90-day tariff pause.

The Commission’s DMA enforcement “continues to have features of what the Trump administration sees as problematic from a trade point of view,” said Dirk Auer, director of competition policy at the International Center for Law & Economics (ICLE).

'Seriousness and evidence'

At issue in the latest case is Apple’s stranglehold on its App Store. The fees it imposes on developers helped it generate nearly $100 billion in revenue last year ― a good proportion of that from users and developers in the EU.

“These are decisions that are not taken with passion” but with “seriousness and evidence,”  Commission competition chief Teresa Ribera told POLITICO. "It’s law enforcement."

Both Apple and Meta, the owner of Facebook and Instagram, which was also fined €200 million on Wednesday, said they would appeal.

"I think it’s pretty clear that the App Store is one of the crown jewels in Apple’s digital empire ― it’s one of the segments of its biz that is really profitable," said ICLE's Auer.

The Commission also issued preliminary findings on Wednesday in a separate non-compliance investigation that Apple's contract terms for alternative app distribution, including its "core technology fee," may be in breach of the DMA, potentially paving the way for further fines. 

The Commission is just one of several global regulators that have targeted the fees Apple extracts from consumers, arguing that the company's ironclad control of its devices leaves developers like Epic Games and Match Group, two American tech firms, with few good alternatives. 

Security risk

Last year's fine was for the same conduct that was targeted on Wednesday.

Apple’s commercial concern is as much a philosophical one, with the company seeing little reason to back down in what it sees as a defense of the interests of its users.

“They have a degree of insistence that they are the sole orchestrators of their ecosystem and get to decide what level of security risk users get, and too much choice makes it a poor experience for consumers,” said CERRE's Meyers.

What's certain is that this won't be the end of the story. As the Commission closes the chapter on the narrow issue of the rules it imposes on developers who want to talk to their users, a fresh fight is gearing up over a broader set of app store issues ― and in particular the fees Apple charges.

The Commission's view that Apple should cut its fees drastically is a “discussion that Apple doesn't want to give in to,” said Alba Ribera Martínez, a lecturer in law at Villanueva University in Madrid. 

While mobile app stores have been on the Commission’s radar going back to a complaint about alleged anticompetitive behavior filed by Swedish audio streaming service Spotify in 2019, the shifting geo-political context could add a new urgency to the issue.

“In a world where the focus is very much on tech sovereignty, the ability to get around key chokepoints like Apple’s App Store is important,” Meyers said. 

While the U.S. government shares many of the same concerns with what it too sees as Apple’s monopolies, that shared perspective does not guarantee it from keeping outside of the U.S.-EU trade dispute.

The fact that the U.S. Department of Justice continues to plug away at its antitrust case against Apple should offer little solace to the Commission, which had been hoping the diplomatic "soufflé" would soon settle down, in the words of another senior EU official.

Meyers of CERRE, too, believes that the Commission would be misguided in seeking too much comfort in the continuation of the U.S. government's anti-tech work.

Or, as he summarizes the administration’s view: “We’re happy to regulate ― but when they’re operating overseas they’re American champions.”

Francesca Micheletti contributed to this report.