European Commerce Will Suffer EU's Attacks On Apple And Meta The Most
The EU is soon to intimately understand a truth too often lost on politicians and regulators: the only closed economy is the world economy. This will become apparent in the aftermath of the EU's $570 million and $228 million fines respectively levied on Apple and Meta.
The EU's regulators will describe the fines as harmful to Apple and Meta uniquely, and consequences of their alleged failure to comply with the EU's Digital Markets Act (DMA). It will perhaps sound nice in the press releases, but it won't be so nice for European businesses reliant on the market reach and resulting prosperity of Apple and Meta.
To see why, contemplate a recent Wall Street Journal headline concerning Meta. It reads this way: 'Meta Faces $7 billion In Lost Ad Revenue From China.' Well, yes. What's true for misguided pols in the EU is similarly true for misguided American political figures who view tariffs as something 'others' pay. Precisely because the United States has long been a large version of 'Hong Kong' when it comes to low tariffs, producers around the world have worked feverishly to serve American workers rendered most productive (the division of labor loves workers more than any other economic arrangement ever conceived) by an open stance to imports that by extension has rendered them most acquisitive.
That the U.S. market has long been so enticing to foreign producers has logically redounded to U.S. social media companies like Meta on which Americans spend so much of their free time. Meta's sites are ad-supported, and it's no surprise that foreign businesses (including Chinese giants like Temu and Shein) have spent impressive sums on ad placement at the various Meta sites as a way of catching the eyes of the world's greatest producers who are, by extension, the world's greatest consumers. Amid 145% tariffs slapped on Chinese goods, ad spending by Chinese business stateside will decline substantially.
Bringing it back to Europe, the EU, and the DMA, among other things the Act demands that Meta provide free access to European users even if they choose the ad-free version of Meta's social media sites. Which means Meta is being asked to give its product away for free. Tough just on Meta? Not a chance. As its unique size and reach attests, European businesses very much rely on Meta to reach customers. Translated, the pain of ad-free Meta sites by decree will be felt most acutely by European businesses striving for growth.
What about Apple? The DMA 'requires major platform holders or "gatekeepers" like Apple to provide third-party developers equal access to iOS and iPadOS system tools and features.' Translated, Apple must make its globally revered products operable with apps and products not specifically vetted by Apple. That's like U.S. regulators telling Ferrari that it must open up its cars to inputs manufactured by Dodge. Not a chance.
Apple not only has a right to restrict which third-party users can operate on its systems, it must do so. And it must do so to the betterment of all third-party players, including those from Europe. Precisely because Apple's products are so beloved, third parties benefit substantially from inclusion. If Apple is forced toward permission-free architecture, it will lose and by extension third party app developers will lose via the destruction of Apple's brand.
It's being said that excessive enforcement of the DMA by the EU is a veiled swipe at President Trump's tariffs from the EU. If so, or even if not, the results of illiberalism by governmental bodies on both sides of the Atlantic are clear for all to see. What harms 'them' harms us, and vice versa. As always, the only closed economy is the world economy.
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