EU throws down gauntlet to Trump with Apple, Google rulings

The European Commission has put Apple and Google on notice: Change your products so they’re in line with the European Union’s digital competition rules, or face the consequences.

The EU executive ruled Wednesday that the two U.S. tech giants may be in breach of the EU’s Digital Markets Act (DMA), throwing down a gauntlet to U.S. President Donald Trump, who has sought to pull the issue of tech regulation into Washington’s escalating trade dispute with the EU.

Apple and Google will need to overhaul some of their key products if they are to escape an infringement decision or fines that could reach up to 10 percent of their global revenues, the Commission said.

But — seemingly aware of the potential to inflame transatlantic tensions — Commission Executive Vice President Teresa Ribera sought to depoliticize the rulings.

“With these decisions, we are simply implementing the law,” Ribera said in a statement. Unlike previous non-compliance findings under the DMA, the EU executive did not hold a press conference to make its announcement.

In recent weeks EU officials have sought to dial down the rhetoric on digital enforcement, appealing to the bloc’s common interest with the U.S. in enforcing competition rules. The Apple decision parallels a lawsuit that the U.S. Department of Justice is pursuing against the company.

However, Joseph Van Coniglio, a competition policy expert at Washington-based think tank Information Technology and Innovation Foundation, said that while there are debates within the U.S. government on how to apply antitrust policy to Big Tech, a more mercantilist view on trade policy is likely to prevail when it comes to the DMA.

He pointed to a February memo signed by Trump that promised to defend American companies from “overseas extortion,” citing the DMA and other digital policies.

“I think the consensus is that the U.S. is going to be opposed [to the Commission’s decisions],” Van Coniglio said.

The Apple decision parallels a lawsuit that the U.S. Department of Justice is pursuing against the company. | Magali Cohen and Hans Lucas/Getty Images

Wednesday’s decisions come ahead of a set of heftier non-compliance rulings from the Commission later this month — which may include fines.

DMA demands

In order to comply with the DMA, the Commission said Apple will need to give its competitors the same access to a range of existing iPhone functionalities, such as notifications and device-pairing, as it provides to its own devices like the Apple Watch.

The EU executive also stated that the company must overhaul how it communicates with developers.

For Apple, the decision amounts to a “micro-managing” of the future of the iPhone, said Dirk Auer of the International Center for Law & Economics.

Others believe the decision doesn’t go far enough. “Third party developers will still not have real app freedom and interoperability can still be hindered by Apple,” said Jan Pefrat of advocacy group European Digital Rights.

Google, in turn, needs to make further changes to its Play Store and Google Search service to stop promoting its own services over those of rivals, the Commission said.

Google’s European policy lead Oliver Bethell said the company has engaged in good-faith negotiations resulting in changes that have diminished traffic for European airlines and hotels.

But the findings concerning Google’s search result page, which follows almost 15 years of similar antitrust casework, should send a signal to parent company Alphabet that its approach “needs to change radically,” said Emmanuel Mounier, head of trade group eu travel tech.