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The European Union’s antitrust regulators have charged Apple with breaching the bloc’s technology rules, a move that could result in significant fines for the iPhone maker. In addition, Apple is under scrutiny for imposing new fees on app developers, sparking another investigation.
The European Commission, the EU’s antitrust and technology regulator, announced on Monday that it had sent preliminary findings to Apple following an investigation launched in March.
This charge marks the first application of the Commission’s landmark Digital Markets Act (DMA), which aims to curb the power of Big Tech and ensure a fair competitive environment for smaller rivals. The Commission has until March next year to issue a final decision. Violations of the DMA can lead to fines of up to 10% of a company’s global annual revenue.
EU antitrust chief Margrethe Vestager highlighted issues with Apple’s new terms, noting they do not comply with the DMA. Apple can avoid a fine if it addresses these concerns by altering its business practices.
“As they stand, we think that these new terms do not allow app developers to communicate freely with their end users and to conclude contracts with them,” Vestager said at a conference. She emphasized that it is up to Apple to decide how to comply with the DMA.
Apple stated that it has made several changes in recent months to align with the DMA after receiving feedback from app developers and the Commission. “As we have done routinely, we will continue to listen and engage with the European Commission,” Apple said in an email.
The Commission criticized Apple’s business terms, particularly the restriction that only allows app developers to steer users through ‘link-outs.’ This means developers can include a link in their app that redirects customers to a web page where they can complete a contract. Additionally, the Commission took issue with the fees Apple charges for facilitating initial customer acquisitions via the App Store, arguing they exceed what is necessary for such remuneration.
“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,” Apple stated.
New Contractual Requirements
The EU executive has also launched a separate investigation into Apple’s new contractual requirements for third-party app developers and app stores. This inquiry will assess whether these requirements are necessary and proportionate.
Key issues include Apple’s core technology fee, the multi-step process required to download and install alternative app stores on iPhones, and the eligibility criteria for developers to offer alternative app stores or distribute apps directly from the web on iPhones.
In March, Apple introduced new fees in the EU, including a core technology fee for major app developers, even if they do not use Apple’s payment services. This move has drawn criticism from companies like “Fortnite” creator Epic Games and others.
Vestager also addressed Apple’s recent announcement to delay the launch of its AI-powered features in the EU, attributing the delay to the DMA. She suggested that Apple implied its AI integration might be anti-competitive.
This ongoing scrutiny and the potential repercussions underscore the EU’s commitment to enforcing the DMA and regulating the influence of major tech companies.
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