Google, Apple Hit By Twin EU Rebuke Amid Big Tech Crackdown

Alphabet Inc.'s Google was warned to step in line with the European Union's Big Tech rules or risk hefty fines as part of a two-pronged escalation against Silicon Valley that risks further inflaming tensions with US President Donald Trump.

The European Commission chastised Google for allegedly breaching the bloc's landmark Digital Markets Act by favouring in-house services across its sprawling search empire and for preventing app developers from steering consumers to offers outside of its Play Store. 

Meanwhile, Apple Inc. was told it must loosen the shackles on its prized iPhone operating system in order to comply with the law, approved last year to bolster the EU's antitrust defences against the power of Silicon Valley. While the Google decision comes with the threat of financial penalties for non-compliance, the Apple action doesn't directly lead to that outcome.

“Let me be clear: Our main focus is creating a culture of compliance” with the DMA, Teresa Ribera, the EU's antitrust chief said in a statement on the move against Google. The measure targeting Apple is an “important step” toward opening its ecosystem, she added.

In recent years, Mountain View, California-based Google has faced growing EU scrutiny over its search business. Last year, it lost a court bid to topple a once-record €2.4 billion ($2.6 billion) fine for abusing its monopoly power to crush rival search shopping services. Apple has previously warned of the EU's attempts to open up its iPhone and iPad operating systems, accusing rival Meta Platforms Inc. of attempting to gain access to its sensitive features in a move that raises “concerns about the privacy and security of users.” 

“Today's decisions wrap us in red tape,” Apple said in a statement. “It's bad for our products and for our European users.” 

Oliver Bethell, Google's senior director for competition, said “today's findings now increase the risk of an even worse experience for Europeans.”

Apple has faced growing EU scrutiny over how its App Store complies with the DMA. The Cupertino, California-based company is expected to be hit with a fine in the coming weeks for allegedly stymieing attempts by developers to offer cheaper subscriptions away from the App Store — a similar practice for which it earlier was hit with a €1.8 billion fine. Meta is also poised to receive a decision over its subscription model for ad-free access to Facebook and Instagram.

Any future EU penalties — be they aimed at Apple or Google — could be badly received by Trump, who's repeatedly poured scorn on the bloc's antitrust fines, saying they are tantamount to tariffs against the US. In an escalating tit-for-tat over tariffs, he's already said the US will respond to the EU's countermeasures against his new 25% tariffs on steel and aluminum, and any future EU fines are likely to be deemed by the White House as a provocation. 

EU regulators are unlikely to be veered drastically off course by Trump's threats. While the Brussels-based executive has wide discretion in fine amounts, Ribera has said that the watchdog will follow through on cases under the DMA.

Eventual fines for violations can be as high as 10% of a firm's global annual revenue, but penalties under traditional competition rules seldom reach that high.