EU Investigates Apple for Violating Digital Competition Rules

The European Union Investigates Apple for Violating New Digital Competition Rules

EU regulators accused Apple of preventing software developers using its App Store from directing users to other sales platforms.

The European Union regulators have presented their first accusations under the new digital competition regulations, accusing Apple of preventing app developers from directing users to cheaper options outside its App Store.

The European Commission stated that, according to preliminary findings from its investigation, the restrictions imposed by the iPhone maker on developers using its mobile App Store violated the Digital Markets Act (DMA) of the 27-nation bloc.

The regulation, also known as the DMA, is a comprehensive set of rules aimed at preventing tech “gatekeepers” from monopolizing digital markets under the threat of heavy financial penalties. The commission launched an initial round of investigations after the regulation came into force in March, including an ongoing separate investigation into whether Apple is doing enough to allow iPhone users to easily switch web browsers, and other cases involving Google and Meta.

Under the DMA provisions, app developers must be able to inform customers about cheaper purchase options and direct them to those offers.

The commission, the executive arm of the bloc, said Apple’s App Store rules “prevent app developers from freely directing consumers to alternative channels for offers and content.”

Apple now has the opportunity to respond to the findings. The commission must make a final decision on Apple’s compliance by March 2025. The company could face fines of up to 10% of its global revenue, amounting to billions of euros, or daily penalties.

The commission kept up the pressure on Apple while opening a new investigation into the contractual terms it offers app developers.

Regulators focused on a “basic tech fee” of 50 euro cents (54 US cents) that Apple now charges developers for each time their apps are downloaded and installed from outside the Apple App Store. The DMA provisions pave the way for alternative app stores to give consumers more choices.

The commission said the new terms are a “condition for accessing some of the new features enabled by the DMA.” Rivals had criticized the fee, saying it would deter many existing free apps, which pay no fees, from switching platforms.

“We are concerned that Apple’s new business model makes it too difficult for app developers to operate as alternative markets and reach their end users on iOS,” said EU Competition Commissioner Margrethe Vestager on social media.

A representative of Apple Inc. said that in recent months the company “has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission.”

“We are confident that our plan complies with the law, and we estimate that more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created,” the company said in a statement. “All developers doing business in the EU on the App Store have the opportunity to use the capabilities we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive price.”

The company stated that it “will continue to listen and engage” with the commission.

Links

• Apple found in breach of EU competition rules – The Guardian
• Sell used Apple device online – iGotOffer
• Everything About Apple’s Products – The complete guide to all Apple consumer electronic products, including technical specifications, identifiers and other valuable information.

Apple charged under new EU competition law: Here’s what you need to know [Video]

Video uploaded by CNBC Television on Jun 24, 2024.