U.S. President Donald Trump says they’re a tax. European regulators consider it routine enforcement. Either way, when EU bureaucrats slap the world’s biggest technology companies with a fine, the numbers can make your eyes bulge.
How exactly these financial penalties are determined is somewhere between an art and a science.
The latest EU fine was levied on Thursday against Google for a cool €890 million — just over $1 billion, at current exchange rates, for the accountants back in Silicon Valley — for having breached the Digital Markets Act, the bloc’s main tech competition law.
A few days earlier, Chinese internet giant Alibaba felt Europe’s wrath with a €550 million fine for failing to stop the sale of illegal and harmful products on its AliExpress e-commerce platform.
Even those hefty sums are small change compared to some previous cases. The EU’s highest court recently upheld a fine of€4.1 billion imposed in 2018 after the European Commission found that Google had abused Android’s market dominance. And Meta was hit with a €1.2 billion fine in 2023 — a decision it’s appealing — under the EU’s privacy bible, the General Data Protection Regulation (GDPR).
The EU’s big stick of corporate fines cannot be boiled down to a simple formula. Still, there are a few clues for better understanding how (and why) it works the way it does.
How are they decided?
The short answer is: It depends.
In competition law, where Brussels has the longest track record of handing out big fines, there’s a well-established formula that starts with a percentage of the company’s annual sales of the product or service in question.
That methodology, the result of decades of litigation, can include discounts for cooperation and ups the amounts for recidivism. Fining decisions almost inevitably end up in court, and even after the EU fine has been issued, a firm can still face billions in damages claims before national courts.
On the Digital Markets Act, which is a regulatory law but works differently from traditional antitrust law — the fines are intended less to penalize a firm than to incentivize compliance. They also come with less of a sticker shock.
When the Commission started issuing multi-million euro fines under the DMA in 2025, to the opprobrium of some ‘Big Tech’ opponents, it pointed to the short duration of the conduct as one reason why the fines come far below the 10 percent of global turnover the regulation threatens. The most recent Google fine came in at a very modest 0.22 percent of the annual revenue of parent company Alphabet.
Though revenue is always considered a ceiling and enforcers always consider the same factors like how serious the infringement was, it’s difficult to avoid the conclusion that the penalties are to some extent arbitrary — and not immune to political considerations.
The Google fine was actually the sum of two penalties (€460 million for Google’s favoring its own results in search, and €430 million for unfair practices in how the Play Store is installed on smartphones) that conveniently arrived just under the €1 billion mark in a moment of fraught transatlantic trade relations.
European Commission spokesperson Thomas Regnier denied that politics is part of the fining process. The EU “always follows due process,” he told POLITICO. Regnier said numerous objective criteria — the seriousness and length of the breach, mitigating factors and threshold keeping the penalties under a certain percentage of revenue — help “ensure that fines remain proportional under all circumstances.”
Penalties issued under the Digital Services Act (DSA), the EU’s landmark content moderation law, are also contested. Chinese e-commerce giant Temu has argued a Commission fine of €200 million levied against it in May is “disproportionate” — though it’s far below the DSA’s higher threshold for fines, which is 6 percent of the company’s annual global revenue.
A Commission official, speaking on condition of anonymity to discuss internal deliberations, said that calculating fines under the DSA includes consideration of factors like “gravity, nature, duration [and] mitigating circumstances.”
The GDPR leaves the levying of fines to national independent privacy regulators rather than the Commission. In theory, that makes the arithmetic less vulnerable to political influence, but presents its own problem — trying to get more than 40 different privacy regulators across the bloc to use the same formula.
In any case, even the highest ever privacy fine of €1.2 billion against Meta didn’t come near the maximum 4 percent of annual turnover allowed under the EU’s privacy regulation. Plus, almost all of the more than €4 billion in fines handed down by the Irish data watchdog, Europe’s key GDPR enforcer, are caught up in court challenges and have not yet been paid.
Where does the money go?
Into EU coffers — but only once all appeals have been run, meaning the cash can take years to arrive. Funds received through fines don’t go towards specific EU spending, but instead reduce the amount that national governments have to pay into the joint budget.
Unlike the DSA and DMA, cash from GDPR fines goes into national governments’ wallets.
The notion of regulatory penalties on American companies going into EU public funds is deeply unpopular in the current United States administration.
U.S. Under Secretary of State for Economic Affairs Jacob Helberg hit out at Thursday’s Google fine, arguing that Brussels “wields regulation as a broadsword against American ingenuity” and that Google is now an “involuntary” major contributor to the EU’s budget. It’s also been a point of irritation for President Donald Trump, who last year slammed the penalties as a hidden tax on U.S. companies.
Do they matter?
Typically, they come with more political than economic weight. Big companies like Google and Meta can rather easily absorb the costs of fines, while enforcement orders to change products, services or legal practices can often be much more important to their bottom lines.
Alexandra Geese, a Green member of the European Parliament from Germany, said the fine against Google is akin to an accounting error for a company of its size. “The EU is still incentivizing tech companies to build monopolies and kill competition,” she said, adding that the whole fining process “feels performative.”
Nonetheless, they have become a concrete symbol of the increasingly intractable differences spanning the Atlantic over how tech is shaping both the economy and society more generally.
More to come
The EU’s AI Act could soon be the next frontier of the battle over fines.
With enforcement of the 2024 law set to begin on August 2, the bloc’s artificial intelligence regulation allows for fines up to 35 million, or if the offender is a company, up to 7 percent of the company’s global annual turnover.
The law lists a range of factors to take into account when determining the size of the fine, such as the gravity and the duration of the infringement, but also to what extent offenders have collaborated with authorities.
In most cases, it will be up to national authorities to impose fines, but the Commission will still oversee the penalty regime.
Francesca Micheletti and Eliza Gkritsi contributed to this report.