The European Commission is working to a deadline of 25 March to decide whether Apple, Meta and Alphabet have breached the European Union’s Digital Markets Act (DMA, Regulation (EU) 2022/1925). Apple and Alphabet are accused of breaches including preventing app developers from prompting their customers to bypass their app stores. Meta is accused of irregularities in eliciting its users’ consent for cross-platform personal data sharing. If found noncompliant, the digital giants could face fines of up to 10% of their global turnover. These would be the first penalties imposed since the DMA obligations became applicable in March 2024.
The decisions will be taken in a politically charged context. The United States dislikes the DMA and has threatened to retaliate with tariffs. As a result, any fines may be modest.
But bowing to foreign pressure is not good policy. Softening the enforcement of EU laws undermines competition in European markets. Vacillating over the DMA would generate uncertainty, undermines the credibility of the EU as a regulatory power and make the EU subordinate to the US.
The primary goal of DMA enforcement is deterrence – dissuading the huge online platforms from infringing the law. However, what if the Commission were to add to this the objective of minimising trade retaliation? In that case, a simplified game-theory model suggests, counterintuitively, that the Commission should increase rather than reduce DMA fines.
To act as a deterrent, DMA fines must at least offset the illegal profits made by infringers (in practice, this rarely happens because fines have upper bounds – such as a maximum of 10% of a company’s turnover – while illegal profits can be very high).
About the Author
Mario Mariniello is a Non-resident fellow at Bruegel since September 2024. He is Visiting Professor at the College of Europe in Natolin, Poland, and formerly taught at the University of Namur, the Université Libre de Bruxelles, and the University of Florence. He is the author of “Digital Economic Policy”, Oxford University Press 2022.