The European Union regulators have formally accused Apple of violating new technology regulations by preventing customers of its App Store from being directed to alternative purchasing options. This announcement comes amidst a broader investigation under the Digital Markets Act (DMA), which aims to curb the dominance of major tech firms.
On Monday, the European Commission, the EU’s executive body, highlighted that Apple’s current App Store rules inhibit app developers from freely guiding consumers to different channels for offers and content. This restriction directly contradicts the DMA’s provisions, which prohibit tech giants from blocking businesses from informing users about cheaper alternatives or subscriptions outside of the app store.
According to the Commission, Apple only permits steering through a system where app developers can provide a link that redirects users to a webpage for purchasing content, such as subscriptions. However, this process is heavily constrained by Apple’s imposed restrictions, preventing developers from freely communicating, promoting offers, and finalizing contracts through their chosen distribution channels.
Additionally, the regulators criticized the fees Apple charges developers for acquiring new customers through the App Store, labeling them as excessive and unnecessary. In response, Apple defended its position, claiming that its changes within the EU comply with the DMA. Apple stated, “We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created.”
Despite Apple’s assurances, it faces potential fines up to 10% of its total worldwide annual turnover if found in breach of the DMA. This scrutiny is not new for Apple, as the company has been under the EU’s radar for similar issues. In March, Apple was hit with a €1.8 billion antitrust fine for allegedly abusing its dominant position in the market for distributing music streaming apps.
The EU’s recent investigation into Apple is part of a broader effort to enforce the DMA, which was enacted to limit the market power of major tech firms like Apple, Alphabet, and Meta. The anti-steering rules have been a significant focus of this probe, aiming to ensure that businesses can inform users about alternative purchasing options without obstruction from platform owners.
Apple has made some significant changes to its App Store operations in the EU in anticipation of the DMA’s enforcement. The company now permits apps to be downloaded from websites and third-party app stores on its devices. Despite these changes, the European Commission has raised concerns about some of Apple’s new practices.
One such concern is Apple’s “core technology fee” of 50 euro cents per app installed outside its App Store. The Commission is investigating whether this fee aligns with the DMA’s requirements. Furthermore, regulators are scrutinizing the steps Apple requires users to take to download alternative app stores or apps, assessing if these measures comply with the bloc’s rules.
The Commission is also examining whether the eligibility requirements for offering alternative app stores or directly distributing apps from the web on iPhones are in accordance with the tech law. These investigations are crucial in ensuring that Big Tech firms adhere to fair market practices and do not exploit their dominant positions to stifle competition and limit consumer choices.
As the EU continues to enforce the DMA, the outcome of this investigation could set a significant precedent for how tech giants operate within the European market. The resolution of these regulatory challenges will be pivotal in shaping the future landscape of digital markets in the EU.
