EU Accuses Apple Of Breaking Bloc’s Digital Rules By Thwarting Competition On App Store
Shortly, Alphabet, Amazon, Meta, Microsoft, ByteDance and Booking.com will also have to fall in line
The European Union (EU) has accused the iPhone maker Apple of violating the bloc’s landmark digital rules by hampering competition on its App Store. It now risks billions of euros in fines.
The European Commission informed Apple, “The App Store rules prevent app developers from freely steering consumers to alternative channels for offers and content”.
The findings have opened a new front in the increasingly bitter fight between the US tech giant and Brussels over the EU’s new Digital Markets Act (DMA) which came into force recently. It could force App Store to change the way it operates.
Apple stated delaying the rolling-out it announced regarding AI features in Europe because of the ‘regulatory uncertainties’ linked to the DMA.
The law reins-in the world’s biggest tech firms, including Apple, by forcing them to compete in the 27-country EU.
The new rules are a challenge to Apple’s walled store, which accused the DMA of creating privacy and security risks for users.
It’s the first time that the Commission has levelled formal charges against a tech firm under the new rules. In March, it opened the first DMA probes into Apple, Google and Meta.
Apple specified that it had made several changes to comply with the rules after feedback from developers and the EU regulator. It added continuing to engage with the Commission.
Apple can access the Commission’s investigations and respond. If it obeys the EU rules, it could avoid a fine. Brussels believes it will give European users easier access to cheaper offers. However, if the Commission’s directions are confirmed, it would adopt a ‘non-compliance decision’ by late March 2025, for penalties.
Under the new law, the Commission has the power to impose fines of up to 10 percent of a company’s total global turnover. For repeat offenders, it can rise to 20 percent.
Additionally, if found to be non-compliant, Apple faces daily penalties of up to five percent of its average daily worldwide turnover. It’s total revenue in the year to September 2023 stood at $383 billion (358 billion euros).
Meanwhile, the EU has the right to break up companies, but only as a last resort.
The App Store has been at the centre of a long-running dispute with the EU, even before the DMA came into force.
In March, the Commission slapped Apple with a 1.8-billion-euro fine after reaching similar conclusions in a probe launched in 2020. The complaint was filed by Spotify, a Swedish music streaming giant.
Apple is appealing the fine.
The EU’s top tech enforcer, Thierry Breton remarked, “Without prejudice to Apple’s right of defence, we are determined to use the clear and effective DMA toolbox to swiftly bring to an end a saga which has already lasted for many years.”
The tech firm is also under investigation over whether it allows users to easily uninstall apps on its iOS operating system, and the design of the web browser choice screen.
The DMA forces big digital companies to offer choice screens for web browsers and search engines to give users more options.
During a recent event in Amsterdam, Margrethe Vestager, the EU’s competition commissioner defended the law by stating, “The DMA is not excessive in its ask.” She admitted finding it ‘surprising’ that the big companies did not “take compliance as a badge of honor.”
The Commission has opened a parallel investigation into Apple over changes, to comply with the DMA by allowing third-party app stores.
Brussels said it will check whether the core technology tariff, a new fee structure for third-party store developers, complies with the law. It intends to investigate the steps a user has to follow to download an alternative app store and if it is in line with the DMA.
The Commission announced closing an antitrust case opened in 2020 against Apple and its App Store terms, as there’s now a probe under the DMA.
Importantly, Apple is not the only tech titan in the EU’s sights.
Google parent Alphabet, Amazon, Meta, Microsoft and TikTok owner ByteDance must also comply with the DMA. Shortly, the online travel giant Booking.com will also have to fall in line.