Apple has become the first US tech giant to be indicted under the European Union’s tough new tech antitrust law and could face multi-billion-dollar fines for throttling developers on its App Store.
The European Commission said on Monday that the iPhone maker may have violated EU digital markets law by banning app developers from easily steering customers to cheaper products outside the App Store.
If found in violation of the law, Apple could be fined up to 10% of its total global revenue, which could amount to tens of billions of dollars given the company’s global revenue of $383 billion in 2023.
Apple is said to be preventing competitors from easily luring customers to cheaper offers outside the App Store. Tada Images – stock.adobe.com
“Under the DMA, developers who distribute apps through Apple’s App Store should be able to inform customers of alternative, less expensive purchasing options free of charge, direct them to those offers, and enable them to make a purchase,” the agency said in a press release.
The case is already seen as a major test of the Digital Markets Act, which came into force in March and established new rules regulating the behaviour of Apple Inc and several other companies considered “gatekeepers” of the internet.
“We are concerned that Apple’s new business model will make it harder for app developers to operate as an alternative marketplace and reach end users on iOS,” EU Competition Commissioner Margrethe Vestager wrote to X.
Vestager recently told CNBC that Apple has a “very serious” non-compliance problem.
Apple has been informed of the European Commission’s preliminary findings and has an opportunity to defend its business practices. The Commission said it will make a final decision by March 2025 on whether Apple has failed to comply with the rules.
Apple refuted the accusations, saying in a statement that it had “made several changes to comply with the DMA in response to feedback from developers and the European Commission.”
Apple has been accused of violating European digital market laws. AP
“We believe our plans comply with the law and estimate that under the new terms we have created, more than 99 percent of developers will pay Apple the same or lower fees,” Apple said in a statement.
“All developers who do business through the App Store in the EU will have the opportunity to take advantage of the features we’ve introduced, including the ability to drive app users to the web to complete their purchases at very competitive prices,” the statement added.
Apple and European authorities have been locked in a long-running battle over the enforcement of competition laws.
Apple said last week that it would delay the European launch of three artificial intelligence features, including its flagship iPhone update, “Apple Intelligence,” due to the Digital Markets Act.
The company cited concerns about regulation, as well as worries that rules requiring Apple to make its software compatible with third parties would force it to compromise safety standards.
EU authorities have unveiled a new non-compliance investigation focused on Apple’s contract terms with developers, including its practice of charging a “core technology fee” for access to the App Store.
European Commission Competition Commissioner Margrethe Vestager previously said Apple had “very serious” compliance issues. Reuters
The Commission is also looking into what it calls the “multi-step user journey” for downloading alternative app stores on the iPhone, as well as the eligibility rules under which Apple allows developers to offer third-party app stores to customers.
The EU charges are the latest sign of a broadening antitrust crackdown on Apple.
European regulators fined Apple $2 billion in March for “abusing its dominant position” in the digital music streaming market.
In the United States, the Department of Justice recently filed a landmark antitrust lawsuit against Apple, alleging that the company engaged in anti-competitive conduct to ensure the iPhone’s dominance in the smartphone market.
With post wire
