Apple’s looming $540 million EU fine is a warning sign to other U.S. companies


FEBRUARY 19, 2024

Tim Cook, CEO of Apple, attends the European Parliament in Brussels, Belgium on Oct. 24, 2018.Dursun Aydemir/Anadolu Agency/Getty Images

Happy President’s Day!

The United States is celebrating Washington today (more precisely, President George Washington’s birthday), but American business leaders would do well to pay attention to what’s happening in Brussels instead.

The European Commission, based in Brussels, is planning to hit another U.S. Big Tech company with an antitrust penalty, the Financial Times reported yesterday. Apple faces a €500 million ($540 million) fine for blocking its music streaming rivals, including the Swedish company Spotify, on its devices and services. For a company with nearly $100 billion in net income, the fine is far from life-threatening. But it’s nevertheless a warning sign.

U.S. companies are landing on the radar of the European commissioners with increasing regularity. Intel was fined $400 million last year; Google’s alleged “anticompetitive” practices have cost it more than $9 billion in European fines over the past decade; and Meta faced a $1.3 billion fine for mishandling user data last year. QualcommMicrosoft, and Amazon also received EU fines in recent years, ranging from just under $1 billion to several billion dollars.

For business leaders, there are two ways to respond to these developments. One is to ramp up their lobbying in Brussels in hopes of swaying rule- and decision-making in their favor. With billions of dollars at stake, it could be a worthwhile investment.

The other is to reflect on the bigger picture at play.

Brussels is unmistakably escalating scrutiny of foreign firms operating in the single market, and it’s clear which areas are in focus: antitrust, data privacy, environmental standards, and—following the EU AI Act— artificial intelligence.

These are areas that are relevant for any U.S. company, whether they have a large presence in the EU or not. Washington lawmakers, especially under the Biden administration, have also been stepping up investigations into antitrust practices, and new rules on data privacy, environmental standards, and AI are in force or are on their way.

All told, it will pay off for U.S. companies to comply with EU laws and regulations—not just to avoid fines in Europe, but to prevent similar investigations and penalties in the U.S. down the line. That’s already happening in environmental regulation: dozens—if not hundreds—of U.S. companies will comply with the EU Corporate Sustainability Reporting Directive in coming years, experts tell me, as the SEC mulls its own sustainability reporting rules.

There’s a Napoleon-era saying in Belgium that “when it rains in Paris, it drizzles in Brussels,” meaning it’s worthwhile to pay attention to what happens in the French capital. For U.S. multinationals, a new adage may be true: “When it rains in Brussels, it drizzles in Washington.” In that case, best to buy an umbrella.

Courtesy: This story was originally featured on Fortune