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Good morning. The EU's top diplomat told me that Brussels has devised a legal loophole to get around Hungary's veto on arms loans to Ukraine funded by locked-up Russian assets, and that foreign ministers will be discussing the workaround today.
The move will be crucial to G7 plans to lend tens of billions of dollars to Ukraine this year. Today, our finance correspondent reveals the European Commission's blueprint for implementing the plan. But first, our tech correspondent predicts a crucial week in the escalating battle between Brussels and Big Tech.
Brussels strikes back
This week, the European Commission will finally use new powers granted to it under landmark rules to rein in big tech companies. Brussels is expected to bring charges against Apple for alleged anti-competitive behaviour and Microsoft for allegedly abusing its market power, writes Javier Espinoza.
Background: The EU has been preparing for years for the full implementation of the Digital Markets Act, a landmark set of rules designed to force powerful “online gatekeepers” to open up their businesses to competition within the EU.
The expected charges against Apple, first reported by the Financial Times, would be the first under these powers and will show the extent to which regulators can force companies to change their practices.
The EU is set to launch a new investigation into whether fees Apple introduced, such as charging app developers 50 cents per download if their apps have more than 1 million users, comply with the rules. Analysts say this goes to the heart of Apple's business model, and targeting the fees could negatively impact how the company makes billions of dollars in the future.
Brussels believes the tech giant has broken the law and plans to indict the iPhone maker as soon as this week, three people familiar with the matter said. If found guilty, Apple could face fines of up to 10% of its annual global revenue.
Apple has denied any wrongdoing and said on Friday it was suspending the launch of new AI-enabled iPhone features in Europe due to uncertainty about how the rules would be implemented.
And Microsoft. Under a separate antitrust law, Brussels suspects the tech company is using its power to bundle its video-streaming app Teams with other software to hurt competitors. The concessions Microsoft has offered to ease those concerns have been insufficient, and a formal complaint against the company is expected to be filed as soon as this week.
Microsoft said it would “continue to work with the European Commission, listen to market concerns, and seek practical solutions that benefit both European customers and developers.”
The case is far from resolved, but some people with knowledge of the details believe the parties could reach an agreement that would allow the company to avoid huge fines.
While the exact timing of the announcement may still change, it's clear that the EU believes now is the right time to come down hard on Big Tech.
Chart of the Day: Mathematics
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French voters trust the far-right Rally National party the most to manage the economy and reduce the budget deficit and debt, despite an underfunded spending plan, according to a Financial Times/Ipsos poll.
Thaw
The European Commission wants EU countries to quickly implement the G7 agreement to provide Ukraine with a $50 billion loan using profits from sanctions-hit Russian foreign exchange reserves, writes Paola Tama.
Background: In documents seen by the Financial Times, the EU executive outlined the basics of a “Ukraine Financing Cooperation Mechanism” that outlines how revenues from assets locked in the EU, possibly including tax revenues from them, would be transferred to Ukraine to repay the G7's $50 billion loan.
“Proceeds will be shared proportionately based on the size of the bilateral loans,” the committee wrote, adding that “each lender will bear the residual risk of the loan.”
EU finance ministers reviewed the document on Friday but failed to agree on the EU's share of the financing, with Italy's Giancarlo Giorgetti, current chair of the G7 finance committee, suggesting the EU's share would be “between 50 and 60 percent.”
The question of whether profits arising from assets held in other G7 member states should also be covered by the regime has yet to be resolved. The total amount of assets frozen by the G7 and its partners is known to be 260 billion euros, of which 190 billion euros are held at the Belgian central securities depository Euroclear, the main target of the EU proposal. Many more assets are frozen in countries such as the United States, the United Kingdom and Japan.
“The terms of participation require further consultation with G7 partners,” the committee wrote.
The goal is to reach a technical agreement by the end of the year. “We need to move forward with this and make loans available to Ukraine this year,” Vice President Valdis Dombrovskis said on Friday.
What to see today
EU foreign ministers meet in Luxembourg.
EU agriculture and fisheries ministers meet.
Please read this
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