Apple is poised to be hit with charges by Brussels, accusing the tech giant of restricting competition on its mobile application platform. This marks the first instance of EU regulators applying their new digital legislations to a major tech company.
The European Commission maintains that Apple has not adhered to requirements to allow app developers to redirect users to external offers from its App Store without implementing fees. This assertion is based on preliminary findings shared by well-informed internal sources involved in the investigation.
These charges are the first of their kind under the new Digital Markets Act. This critical legislation has been formulated to ensure influential “online gatekeepers” open their services to competition within the EU. In March, the commission confirmed that it was investigating Apple, along with Alphabet and Meta, leveraging powers conferred by the DMA. Announcement about the charges against Apple is anticipated shortly, according to two case insiders.
However, these sources also noted that the regulatory findings are still preliminary. Apple has the opportunity to rectify its practices which could trigger a revision of the regulators’ final decision. The timeline for any ensuing announcement could also be subject to change.
Additionally, the EU might choose to levy charges against other tech firms. Investigations into possible bias towards their app store by Alphabet, Google’s parent company, and the use of personal data for advertising by Meta, the Facebook parent company, are ongoing.
Should Apple be deemed to be violating the DMA, it faces daily non-compliant penalties of up to 5 per cent of its daily global turnover, currently standing at just over $1 billion (€930 million). This development comes as competition authorities worldwide increase their focus on the dominance of major tech firms in the market. In March, the US instigated an antitrust lawsuit against Apple, accusing it of using its smartphone sector dominance to quash competition and restrict consumer options.
Epic Games, which instigated legal proceedings against Apple over the App Store in 2020, is still waiting on a decision from a US federal judge. The matter pertains to whether Apple failed to adhere to a US directive proscribing its steering policies, in light of a series of recent courtroom hearings. In January, Apple publicised historic revisions to its EU iOS mobile software, App Store, and Safari browser.
With the aim to satisfy authorities in Brussels, Apple has undertaken a transformation that permits its users to navigate and download apps from competitors’ app stores and other outside sources. The modifications also encompass a fee reduction for digital product and service providers from 30% to 17% via Apple’s App Store.
Despite this, there are regulatory examinations from the European Union ongoing to determine whether these updated fee structures comply with its newly introduced digital regulations. Apple has instituted fresh charges in Europe, involving a 50-cent “essential tech fee” for app developers with over a million users every time an initial payment is made by a customer. Furthermore, an extra 3% charge will be enforced on app creators utilising Apple’s payment processing service.
There have been concerns expressed by some developers that these altered fees may result in them having to endure augmented charges. There is potential for the EU to declare preliminary charges relating to these developer fees, as per insiders related to the commission’s decision-making process.
A study conducted by Sensor Tower indicated that throughout the second quarter of 2024 the overall consumer spending on Apple’s App Store has remained somewhat stagnant. This suggests that the new EU regulations have yet to exert any considerable impact on company’s profit margin.
The EU declined to offer any comment, while Apple, though refraining from a direct comment, referred to a previous declaration stating, “We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations.” The Financial Times holds the copyright of this information.