White House condemns Europe’s ‘extortion’ of Apple and Meta

If it looks like a trade war, swims like a trade war, and quacks like a trade war, then it’s probably a trade war that has now broken out — this time between the US and the EU as the White House condemns Europe’s punitive fines against Apple and Meta, fines the companies intend to appeal.

Europe hit Apple and Meta with fines of €500m and €200m, respectively, yesterday, punishing both companies for noncompliance with Europe’s Digital Markets Act, a piece of legislation that pretends to be about opening up markets but seems custom-designed to impact the US tech giants.

The White House has called these fines a “novel form of economic extortion” and has warned Europe that the US will not tolerate the magnitude of these fines.

Custom-fitted penalties

The steep fines surprised most commentators, as whispers coming out of the bloc had hinted that the EU would impose minimal fines against both tech companies in order to avoid reprisals from the US administration. This doesn’t seem to be what happened, unless we assume that €700m is now seen as small change by Europe’s leaders, who appear to have given themselves the right to charge US companies even more. 

The fines come as Europe and the US attempt to forge new trading agreements in response to pressure from the US administration and its tariff threats. While the impact of tariffs will hurt US consumers most, repercussions will also be felt by manufacturers and trading partners who have fed US demand until now.

The effect will also soon be felt on a wider basis as a trade barrier-induced slump hits shipping and distribution globally in the coming weeks, reflecting the slowdown in demand around the imposition of those tariffs. 

Playing at leadership

Despite the looming risk of consequences for their own economies, both in terms of manufacturing demand and the impact on their own manufacturing businesses of an onset of low-cost consumer goods originally destined for the US market, Europe’s leaders seem to want to cosplay at playing hardball.

European Commission spokesperson Thomas Regnier recently said the EU “will enforce our tech legislation without any doubt, and this has nothing to do with the trade negotiations currently ongoing with the US.”

That may be how Europe’s leaders see it, but their self-perception means little to a White House that sees these fines as extortionate reprisals against some of America’s biggest and most successful firms.

The administration is far more likely to cleave to the opinion of Meta and Apple:

“The European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards,” Meta said.

“Today’s announcements are yet 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 force us to give away our technology for free,” Apple said.

Who designed the rules, and for what purpose?

While Regnier insists the rules are being applied fairly and would be applied against any firm, no matter where they are from, critics argue that the DMA seems to have been expressly drafted to constrain the power of US firms.

The US is not blind to this conjecture. “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,” said a White House spokesperson.

The bellicose response emerging from within the US administration suggests it is quite willing to issue its own set of reprisals against Europe’s attempts to fine the tech firms — but that response may not be immediate, pending the result of any legal appeals to those decisions on the part of Apple and Meta.

The scenario doesn’t equate to the best mood music.

At a time when the administration is practicing a very blunt approach to making deals, European leaders seem to want to hide the true nature of their own equally self-serving responses behind unconvincing veneers of respectability (such as the DMA).

Will the future be better tomorrow?

In this kind of context, the idea that relationships may become worse before they get better isn’t just a problem waiting to happen. It appears to be a problem that’s already here.

Like a squawking duck, this particular sequence of events certainly seems to be forming up to become exactly what it sounds like as the US administration puts its own perception of national interest first, unleashing a challenging set of circumstances for businesses worldwide, including those of Apple and Facebook, the US business entities it probably sees itself as trying to protect. 

Ironically, the consequences of these combined sequences of events probably won’t unleash a great deal of benefit for anyone — except, possibly, for some wealthy individuals who want to sell apps via their own App Store.

US President George W. Bush once famously said, “The future will be better tomorrow.”

Right now, in the absence of positive dialogue, that’s not what I see coming down the pipe.

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