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Apple has become the first company to be charged under the European Union’s Digital Markets Act (DMA). The European lawmakers found the iPhone maker non-compliant with their app store rules. It allegedly doesn’t allow app developers to freely steer users to offers outside its App Store. The European Commission has sent a formal warning to the company over the matter. The EU also launched a fresh investigation into Apple’s support for third-party iOS app marketplaces.
The EU charged Apple with violating DMA rules for app stores
The DMA is the EU’s new law aimed at identifying and regulating digital gatekeepers so the market is fairer and more contestable for all players, big and small. The so-called six gatekeepers—Apple, Amazon, Microsoft, Alphabet (Google), Meta, and ByteDance (TikTok)—were given until March 2024 to comply with the new rules. Among those is a rule that makes third-party developers more independent in choosing payment avenues and installation sources for their apps.
Developers can steer users to other platforms with better offers, and the gatekeepers can’t stop them. They also can’t levy any fee on developers for doing so. However, Apple didn’t fully comply with this rule. While it did open up the App Store to outside stores and payment avenues, the company tried to play smart. First, it froze Fortnite and Epic’s developer accounts for steering users away. And when it lifted the ban, the iPhone maker charged a 27% commission on transactions.
Of course, European lawmakers were watching this and promptly charged Apple under the DMA. “Our preliminary position is that Apple does not fully allow steering,” said Margrethe Vestager, the head of competition policy in Europe. “Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.” Apple has until March 2025 to respond to the EU’s allegations, which is a long time to make amendments.
If Apple still doesn’t comply with the EU’s DMA rules, it faces a fine of up to 10% of its annual worldwide revenue. Based on last year’s earnings, the fine would amount to $38 billion. The fine amount increases to 20% of the annual revenue if a company is charged with repeat infringements. Time will tell how Apple will respond. The EU previously fined the company €1.84 billion (approx. $2 billion) for similar anti-steering practices in an antitrust case pre-dating the DMA.
Apple is also facing a fresh investigation from the European watchdog
Apple has another case looming over its head in Europe. The EU is investigating its policies for third-party iOS app stores. The primary focus is on the company’s Core Technology Fee, which requires outside app stores and apps to pay a €0.50 fee per installation. Apple also makes users pass through a laborious multi-step process to install third-party marketplaces and apps from those marketplaces. All the while, it shows various warnings to try and restrict users to its App Store.
Additionally, the EU is looking into Apple’s various eligibility requirements for developers to be able to offer third-party app stores. “The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts,” said Vestager. Apple, meanwhile, recently blamed the DMA’s “regulatory uncertainties” for delaying the launch of its AI features in Europe. The firm says the EU’s interoperability requirements are a threat to privacy and security.