EU delays Apple and Meta fines ahead of US trade talks, buying time on Digital Markets Act enforcement
Apr 18, 2025
Key Points
- The EU postponed fines against Apple and Meta under the Digital Markets Act, timing the delay to coincide with US-EU trade talks and signaling political willingness to negotiate enforcement.
- The Meta case hinges on the EU's demand that Meta show untargeted ads instead of accepting its compromise of lower-personalized ads, a move critics argue would hurt small businesses competing against well-funded incumbents.
- Apple's China smartphone share dropped to 13.7% as Chinese subsidies for devices under $822 capture 75% of the market, while the EU relies on regulation rather than building homegrown competitors.
Summary
The European Union postponed announcing cease-and-desist orders and fines against Apple and Meta under the Digital Markets Act, delaying enforcement initially scheduled for Tuesday. The decision came shortly before EU trade commissioner Maros Šefčovič met with US officials in Washington on Monday as part of broader trade negotiations following President Trump's 90-day pause on some tariffs. Italian Prime Minister Giorgia Meloni also met with Trump, who signaled openness to a trade deal with the EU.
The cases carry a theoretical maximum fine of 10% of each company's global annual revenue, though people familiar with the matter expect actual penalties would be substantially lower. Both investigations opened in March 2024 and resulted in preliminary findings last summer under the Digital Markets Act, legislation designed to ease competition against dominant tech platforms.
Meta's advertising model
The EU argues that Meta's policy violates the law by requiring users either to pay for Facebook or Instagram or to consent to data collection for targeted advertising. Meta proposed a third option: showing less personalized ads without a subscription. The EU rejected that compromise and is demanding Meta serve random, untargeted ads instead. This approach would disproportionately harm small businesses and startups competing against deep-pocketed incumbents who can afford inefficient ad spending. The dynamic mirrors Apple's App Tracking Transparency changes in iOS, which ultimately strengthened Facebook's competitive position by making it the only company with sufficient first-party data to run effective machine-learning-based ads without device-level tracking.
The geopolitical backdrop
China is actively subsidizing domestic smartphone makers, particularly Xiaomi, which reclaimed the top market position after nearly a decade, to push consumers toward lower-cost devices. Apple's market share in China dropped to 13.7% in the first quarter from 15.6% a year earlier, sliding to fifth place. The subsidies target devices under 6,000 yuan (roughly $822) and apply to a segment representing 75% of China's smartphone user base, effectively pricing out premium iPhones. Europe, by contrast, is using enforcement and taxation rather than building homegrown competitors. Nokia, the only historically significant European phone manufacturer, no longer competes in mobile devices.