Background: For weeks, the European Commission was poised to fine Apple and Meta for competition violations. Earlier this month, and against the backdrop of fresh trade conflicts, Commission President Ursula der Leyen was explicit when she said that the EU could hit US services as retaliation for any US tariffs on the bloc.

In a long-anticipated move, Brussels moved forward with fining Apple €500 million and Meta €200 million for violating the Digital Markets Act (DMA). The DMA, introduced in 2022, designates a few select companies, mainly US tech firms as digital gatekeepers, imposing a slew of compliance rules and allowing European regulators to impose changes on their businesses.

The fines announced today center on Meta’s “pay or consent” model and Apple’s app store. Meta offered Europeans an ad-free subscription service and a free advertising service. Regulators said that amounted to forcing users to pay for privacy. The DMA requires companies to obtain users’ permission before combining data.

Regulators say Apple put too many restrictions on the design of third-party apps, blocking them from “steering” consumers to cheap alternatives for subscriptions, and requiring developers to pay an unfair “technology fee.”

Both US companies look set to appeal the decisions. Meta, in particular, echoed Trump administration complaints. “The European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards,” Meta’s Chief Global Affairs Officer, Joel Kaplan, said. “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.”

Apple called the decision “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 forcing us to give away our technology for free.” At the same time, it pledged to “continue engaging with the Commission in service of our European customers.”

What this means: US companies have long seen the EU’s gatekeeper designation as discriminatory, pointing out that the EU excluded other European and Chinese firms that also hold market power in other digital sectors.

US government officials in the current and previous administrations have also derided the DMA as unfair and discriminatory. The fines could blow up the ongoing tense trade talks. And in the context of an economic rift between the US and Europe, the EU’s timing could not have been worse and undermines the potential for a comprehensive trade deal with the United States.

And Brussels isn’t showing signs of slowing down. Europe is eyeing potential additional retaliation against US digital exports. These could include imposing new digital taxes, restricting intellectual property rights, and even preventing US tech companies from bidding on public contracts or investing in Europe.

Coming clash: The leading US tech companies are under siege in Europe and at home. They face export controls on sales to China, potential tariffs, and a slowing economy — threatening planned investments in artificial intelligence infrastructure. Despite its opposition to the DMA, the Trump administration is pursuing antitrust cases that could lead to the breakup of both Alphabet and Meta.

The EU may see the US Administration’s legal cases against large tech firms as a sign that they can move forward with more regulation and fines, but that would be a mistake. Even if the Commission sees itself as taking a relatively measured approach — after all, Wednesday’s penalties were lower than the maximum allowed under the DMA — that will not be the view from the United States government, which sees regulation of US companies as its sole prerogative.

On Wednesday, a US National Security Council spokesperson lambasted the fines as a “novel form of economic extortion [that] will not be tolerated by the United States” and warned “extraterritorial regulations that specifically target and undermine American companies, stifle innovation, and enable censorship will be recognized as barriers to trade and a direct threat to free civil society … The EU’s malicious targeting of American companies and consumers must stop. End the EU’s regulatory death spiral!”

Bigger picture: The regulatory actions on both sides of the Atlantic could adversely impact the US technology leadership plans. The major tech players will be juggling legal problems and economic uncertainty, hardly ideal conditions for continued investment in research and development.

European regulators understood the dangers of moving ahead during this period of extreme transatlantic tensions. The fines against Apple and Meta were initially scheduled to be imposed in March. The dossiers became politicized while waiting for a political green light. But criticism mounted from European policymakers and politicians that Europe could “lose what makes it great.”

Referring to the “Brussels Effect” phrase she coined to describe the phenomenon where European regulations often become global standards, Columbia University law professor Anu Bradford warned “The EU seems poised to trade away its leverage as a global regulatory superpower.”

Ronan Murphy is Director of the Tech Policy Program at the Center for European Policy Analysis.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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