America’s big tech giants, including iPhone maker Apple (AAPL) and Instagram parent Meta Platforms (META), are bowing to continued pressure from the European Union’s (EU) toughened antitrust rules. According to the latest reports, both companies have agreed to implement changes suggested by the EU to comply with its governing laws and continue operating in the country. Let’s take a closer look at the two cases.
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EU Warns Meta of Daily Fines for Non-Compliance
In July 2024, the European Commission moved to fine Meta $200 million for non-compliance of its “pay-or-consent” policy with the Digital Markets Act (DMA). Despite the initial investigation started in 2023 and an order requiring Meta to change its policy, Meta only made minor adjustments to the policy.
Meta changed its pay-or-consent policy, significantly reducing the subscription price for the ad-free version and offering EU customers a new choice to use Facebook and Instagram for free with fewer personalized ads. The company said these changes, along with some others, “go beyond what’s required by EU law.” However, the EU is still reviewing if these changes are sufficient.
Finally, the European Commission has informed Meta that it may face daily fines if it fails to implement the limited changes required by the regulator to its pay-or-consent model. The regulator also stated that it cannot confirm at this stage whether Meta has made the changes or whether they are adequate to comply with the main requirements of the DMA. In response, Meta claimed that EU regulators are discriminating against its business model and reiterated that it has implemented the required changes adequately.
Apple Introduces Tiered System for Developers to Avoid Fines
Remarkably, Apple has introduced new App Store changes in the EU to comply with the DMA and avoid further penalties. The company has launched a new tier system for its Store services fee, giving developers the option to choose between basic fees and higher commissions. Under the new system, Tier 1 offers developers access to only basic App Store features for a 5% commission on in-app purchases. These features include app reviews, privacy nutrition labels, and access to Apple Support.
Meanwhile, Tier 2 offers higher benefits but is priced at a 13% commission. The added features include automatic app updates, automatic app downloads, and access to tools that help developers promote their app. By default, all apps on the App Store will be placed on the Tier 2 system, developers need to move their apps to Tier 1 if they want. Moreover, Apple is introducing a new Core Technology Commission of 5% on outside purchases made in apps distributed on the App Store. Apple was fined $500 million in April for its anticompetitive App Store practices. The company has until July to pay the fine or face interest penalties on the delayed payment.
AAPL or META: Which Is the Better Stock to Buy?
We used TipRanks Stock Comparison Tool to determine which stock is currently more favored by analysts. Investors can choose to invest in either stock after conducting thorough research.
Currently, META stock has a Strong Buy consensus rating and a Smart Score of ‘Perfect 10,’ which implies that the stock is most likely to exceed market expectations.
