Trump raises high tariffs stick, can it shake the EU's determination to stand firm against Silicon Valley?

After Trump threatened retaliation against fines on large US companies, the EU's determination to challenge Silicon Valley giants faces a serious test. The US president warned last week that he would retaliate with punitive tariffs against any "disproportionate" penalties, and said the EU's Digital Markets Act would be his target. Trump's tough stance may have put the EU's new competition chief, Teresa Ribera, in a dilemma. Ribera is reportedly risking her reputation by promising to complete an investigation into Apple Inc. and Meta by the end of March, and if these companies fail to address Ribera's concerns, they could face hefty fines. If Ribera stands firm, the EU may face Trump's angry retaliation; but if she compromises, she could seriously undermine landmark legislation aimed at constraining large tech companies. "Additional fines will only provoke a stronger reaction from Trump," said Kay Jebelli, a senior executive at the Progressive Business Chamber representing Amazon.com Inc., Meta, Apple Inc., and Alphabet Inc. Class C. "In the eyes of the US government, any fine could be seen as unreasonable." The White House has yet to respond to requests for comment on what fines are considered disproportionate. The EU's executive branch has publicly promised to respond "swiftly and decisively" to any retaliation triggered by fines imposed under the Digital Markets Act and the Digital Services Act. The Digital Services Act is seen by the White House as a direct attack on free speech. As threats continue, European groups are urging Ribera and EU Tech Commissioner Henna Virkkunen not to give in. "Failing to enforce these democratically enacted laws will undermine the rule of law and the legitimacy of the EU for decades to come," said Felix Styma, chairman of the pan-European alliance Initiative for Neutral Search representing Silicon Valley competitors. "This may be the last chance for the free world to control digital monopolies." The Digital Markets Act was born out of disappointment that traditional competition rules had failed to curb abusive behavior - despite past cases of hefty fines, including an over $8 billion fine against Alphabet Inc. Class C and an order for Apple Inc. to pay back 13 billion tax to Ireland. Under the Digital Markets Act, the EU has opened investigations into Apple Inc., Meta, and Alphabet Inc. Class C. While the investigation into Alphabet Inc. Class C's search business faces delays, the EU has the power to impose fines on Apple Inc. and Meta equivalent to up to 10% of their global revenues. Although there is no legal deadline for fines under the Digital Services Act, platforms that do not comply with the regulations could face fines of up to 6%. Platforms under review by the Musk-led US government's thorough reform and Trump's new ally Zuckerberg (including X, Facebook, and Instagram) are also subject to scrutiny. Analysts say the EU has flexibility in calculating these fines and can set levels that pose less of a threat to Trump and US tech giants. This means a face-saving solution may be to completely avoid fines. "The Digital Markets Act and Digital Services Act are now EU law and must be enforced," said Assimakis Komninos, a partner at the law firm White & Case who represents tech giant clients. "But imposing excessive fines just to make headlines is not helpful."