Apple Inc. on Wednesday lost its legal challenge against the European Union’s landmark Digital Markets Act (DMA), which classifies its App Store and iOS operating system as “gatekeepers” subject to rules designed to boost competition. The General Court of the European Union dismissed Apple’s challenge to its designation, reinforcing the EU’s antitrust efforts to boost competition and consumer choice. The court also ruled that Apple’s challenge regarding iMessage was inadmissible.

The DMA, effective since May 2023, imposes obligations on major tech companies and allows fines of up to 10% of global annual revenue for violations. Meta Platforms Inc. and ByteDance have also challenged the law. The court upheld the decision to classify Apple’s five App Stores across iPhone, iPad, Mac, Apple TV, and Apple Watch as a single core platform service under the DMA. The judges ruled that all five stores serve the same purpose of connecting app developers with users to distribute software.

Apple can still appeal the legal ruling to the Court of Justice of the European Union. In November, Apple informed the European Commission that Apple Ads and Apple Maps meet the thresholds under the DMA. The iPhone maker reiterated its criticism of the DMA, stating the law “goes beyond what is lawful and proportionate” and could undermine user privacy and security. The company said it would continue advocating for innovation and stronger privacy protections for its European customers.

The EU decision followed a separate ruling where the Court of Justice of the EU upheld a €4.1 billion ($4.67 billion) antitrust fine against Alphabet Inc.’s Google. The crackdown has strained U.S.-EU relations, with President Donald Trump accusing European Union regulators of unfairly targeting American companies. In August, Trump warned he would impose steep tariffs on European exports unless the EU dropped what he called its “discriminatory” actions, adding that U.S. tech firms would no longer serve as the world’s “piggy bank” or “doormat.”

Trump also threatened to impose 100% tariffs on French wines and champagne unless France scraps its 3% digital tax on American technology companies. He warned that any European country imposing a digital services tax on U.S. tech companies would face a 100% tariff on goods exported to the U.S. The threat comes days after the U.S.-EU trade deal left digital taxes unresolved.

Apple is testing DRAM chips from China's ChangXin Memory Technologies (CXMT) for devices sold in China as the state-backed firm accelerates its expansion. The move comes as Apple seeks to secure memory supply amid fears of a global shortage driven by AI infrastructure demand. Analyst Ming-Chi Kuo noted that the push to source from CXMT is about surviving the supply crunch rather than lowering costs.

Supply Gap and Impact

Kuo warned that growing demand from AI data centers will widen the global memory supply gap through 2027. He estimates that up to 20% of memory capacity could shift away from consumer electronics. Apple could receive 10%–20% fewer A20 chips between the second half of 2026 and the first quarter of 2027 due to tight LPDDR memory supply. Some of this shortfall may also stem from overbooked orders.

CXMT's Expansion and Partnerships

CXMT is rapidly expanding its construction in Hefei and has become a cornerstone of China's AI chip ambitions. The company is not on the U.S. Entity List, allowing it to purchase China-approved equipment from partners like ASML Holding NV. CXMT relies on ASML's deep ultraviolet (DUV) lithography machines for production. The partnership is symbolized by a "friendship garden" established at CXMT's headquarters in 2024.

Political and Market Context

U.S. tech companies view CXMT as a potential fourth global DRAM supplier, though the move remains politically sensitive. The Trump administration has reportedly delayed adding CXMT to its trade blacklist to avoid escalating tensions with China. Apple has previously faced criticism from U.S. lawmakers over plans to use Chinese memory chips due to security concerns.

Price Hikes and Product Impact

Last week, Apple raised prices on products including the MacBook Neo, MacBook Air, iPad Pro, iPad Air, HomePod, HomePod mini, and Apple TV. The company cited tighter memory and storage supplies amid rising AI infrastructure demand as the reason for the hikes, while iPhone prices remained unchanged.