Tech Legal Brief #7 –DMA & Existential Antitrust Threats
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Welcome to the seventh edition of Tech Legal Brief!
I use these Briefs occasionally to catch up on important stories in Tech & Legal.
Here’s our agenda for today:
- Was the EU’s DMA Fines Against Meta & Apple Symbolic?
- The Existential Antitrust Threats Against Google & Meta
- Irish Privacy Watchdog Hands TikTok Third-Largest GDPR Fine Ever
- ChatGPT Hallucinates Fake Child Murderer in Breach of GDPR
- The Undisclosed Use of AI Chatbots on Popular Subreddit
- Tech Legal News (links)
Was the EU’s DMA Fines Against Meta & Apple Symbolic?
On April 23, the EU Commission announced it had issued the first penalties under the Digital Markets Act (DMA). After yearlong investigations Apple was fined €500 million and Meta was fined €200 million. For legal specifics and details about the fines, I recommend this explainer by Kluwer Competition Law Blog.
The overarching purpose of DMA is to ensure a fair and open digital marketplace by preventing so-called "gatekeepers" from imposing unfair trading conditions and practices on competing businesses and consumers. “Gatekeepers” are designated platforms with more than 45 million monthly active end users and 10,000 yearly active business users in the EU.
Fines under the DMA for non-compliance can go up 10 % of a gatekeeper's total worldwide turnover in the preceding financial year, and up to 20% in case of repeated infringements. The former EU Commissioner for Competition, Margrethe Vestager, set a relatively high bar for fines to the BigTech companies during her tenure. Google was fined €4.34 billion in 2018 for antitrust violations related to its Android system. Apple was told to pay back €13 billion in unpaid taxes to Ireland last year.
Critics say that the much-anticipated DMA penalties against Meta and Apple felt more symbolic than a show of strength since the fines were smaller than expected. We can further speculate if the EU Commission takes a softer approach to BigTech due to fears of stiff retaliation from the Orange House (I suggest this term to describe the Trump administration which operates so far from traditional US policy, culture and values).
The critics’ line of thinking is plain wrong for two reasons.
First of all, from Meta and Apple’s perspective, the fines were not felt as symbolic. Meta’s Chief Global Affairs Officer Joel Kaplan says that ”the European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards." A spokesperson for Apple, Emma Wilson, said “yet another example of the European Commission unfairly targeting Apple”. Meta and Apple would not respond with such outrage if they viewed the fines as insignificant custom duties.
Secondly, and more importantly, we shouldn’t see DMA as a political tool. It wasn’t meant to break BigTech’s stronghold on Europe by punishing foreign companies with humongous fines. In reality, DMA is a legal instrument made for consumer protection and designed to prevent the abuse of dominant market positions in the digital market. It’s a mistake read more into it than that. There is no secrecy involved or need to make up conspiracy theories as the rules are transparent and would apply to any sufficiently large online platform. We shouldn’t embrace Donald Trump’s misguided perspective that the fines are a “novel form of economic extortion” or in other ways confuse EU’s competition laws with political statements.
The Existential Antitrust Threats Against Google & Meta
BigTech platforms can adjust to the DMA. The rules may be complicated, unclear and ambiguous, and they will have a negative effect on the companies' bottom line in Europe in the short term. However, at its roots, DMA is about consumer protection which is a legitimate concern in a democratic society and necessary to fulfill the legally binding human rights obligations in “The Charter of Fundamental Rights of the European Union” (which is part of the EU’s constitutional framework). DMA is not an existential threat to the big online platforms unless human rights are. However, ongoing antitrust action in the US might be an existential threat.
After a federal judge ruled on April 17 that Google’s dominant position in the online advertising market constitutes an illegal monopoly, one of the proposed remedies by the Department of Justice (DOJ) and the 17 states who brought the case, is for Google to divest a key part of its advertisement business. Specifically, DOJ and the state parties are asking the court to force Google to sell Google AdX, the marketplace that connects sellers and buyers of Google Ads, and DoubleClick for Publishers (DFP) where publishers can manage the Google ads on their websites. Google is, at its core, an advertisement company. It earns most of its revenue therefrom. A threat to its advertisement business model is a threat to its existence.
The trial on remedies will commence on 22 September 2025.
In a separate landmark case, Google is fighting the proposed measures by DOJ to sell of its’ Chrome browser after a federal judge ruled in August 2024 that Google holds a monopoly in internet search.
Meta is currently fighting an existential battle in court too.
The Federal Trade Commission (FTC) argues that Meta has maintained an illegal monopoly in the market for “personal social networking services” through “killer acquisitions” – meaning they have bought smaller rivals only to remove them from the market - such as the acquisitions of Instagram and WhatsApp in the early 2010s. Should the District Court of Columbia rule in favor of FTC, the remedies will be decided in a separate trial.
A possible outcome would be that Meta is forced to sell Instagram and WhatsApp. That would be an absolute disaster for the social media giant. Meta’s ability to collect and cross-reference user data across Facebook, Instagram, and WhatsApp for personalized advertisement is foundational to its empire. Financially speaking, Instagram alone accounts for at least half of Meta’s revenue.
Mark Zuckerberg has been very outspoken about his intentions for wanting to buy Instagram and WhatsApp. For example, in an e-mail to other Facebook executives from February 2012, disclosed as evidence during the trial, Zuckerberg wrote about Instagram:
“I think what we’d do is keep their product running and just not add more features to it, and focus future development on our products, including building all of their camera features into ours. By not killing their products we prevent everyone from hating us and we make sure we don’t immediately create a hole in the market for someone else to fill, but all future development would go towards our core products.”
And:
“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs [sic] up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again.”
It surely sounds like Zuckerberg views Instagram as a major threat and wants to buy it as a way of blocking competition. That is by definition illegal anti-competitive behavior but arguably not a smoking gun.
To win the case, the FTC has to argue successfully that TikTok, YouTube, Twitter/X, Reddit, Pinterest and LinkedIn are not direct competitors to Meta. If these platforms are competitors, it would mean that Meta’s market share in “personal social networking services” is not large enough – even with the acquisition of Instagram and WhatsApp - to fall within monopoly territory.
FTC’s argument is that the online service delivered by Meta/Facebook is primarily about personal connections with friends and families. The only major competitor in this space is Snapchat, while other online services such as TikTok, YouTube, Spotify and Netflix are for video and audio consumption, Twitter/X, Reddit, and Pinterest are for broadcasting and discovering content based on users’ interests, and LinkedIn is about professional connections rather than personal connections.
Even if Meta should lose the case, it’s very likely that the Orange House will intervene during an appeal process. After all, the tech tycoons were symbolically lining up behind Trump on inauguration day, Meta donated $1 million to Trump’s inauguration fund, and the algorithms and moderation policies on Facebook and Instagram alongside TikTok and X ultimately helped Trump to secure the election victory last year. Saving Meta from the justice of law is the least Trump could do in return. Right?
Considering the political climate, we may not see the tech oligarchy crumble in coming years. Still, the antitrust enforcement by DOJ and FTC is already forcing BigTech to stop “killer acquisitions” and other anti-competitive tricks from the coopting disruption playbook.
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