EU targets Apple App Store for 1st time using new digital competition rules
European Commission said according to the preliminary findings of its investigation, the restrictions that the iPhone maker imposes on developers using its mobile App Store had breached the 27-nation bloc's Digital Markets Act
PTI
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Representative photo
London, 24 June
European Union regulators on Monday
levelled their first charges under the bloc's new digital competition rulebook,
accusing Apple of preventing app makers from pointing users to cheaper options
outside its App Store.
The European Commission said that
according to the preliminary findings of its investigation, the restrictions
that the iPhone maker imposes on developers using its mobile App Store had
breached the 27-nation bloc's Digital Markets Act.
The rulebook, also known as the
DMA, is a sweeping set of regulations aimed at preventing tech “gatekeepers”
from cornering digital markets under threat of heavy financial penalties. The
commission opened an initial round of investigations after it took effect in
March, including a separate ongoing probe into whether Apple is doing enough to
allow iPhone users to easily change web browsers, and other cases involving
Google and Meta.
Apple has been facing pressure on
both sides of the Atlantic to tear down some of the competitive barriers around
its lucrative iPhone franchise. The US Justice Department has filed a sweeping
antitrust lawsuit against Apple this year, accusing it of illegally
monopolising the smartphone market and boxing out competitors, stifling
innovation and keeping prices artificially high.
App makers such as Spotify had
complained for years about Apple's requirement that subscriptions only be
bought through iOS apps, allowing the company to take a commission of up to
30%.
Under the DMA's provisions, app
developers must be allowed to inform customers of cheaper purchasing options
and direct them to those offers. The commission, the bloc's executive arm, said
App Store rules “prevent app developers from freely steering consumers to
alternative channels for offers and content.”
Apple now has a chance to respond
to the findings. The commission must make a final decision on Apple's
compliance by March 2025. The company could face fines worth up to 10% of its
global revenue, which could amount to billions of euros, or daily penalties.
The commission kept up the pressure
on Apple, simultaneously opening a new investigation into contractual terms
that it's offering app developers.
Regulators zeroed in on a “core
technology fee” of 50 euro cents (54 cents) that Apple is now charging
developers for each time their apps are downloaded and installed from outside
Apple's App Store. The DMA's provisions open the way for alternative app stores
to give consumers more choice.
The commission said the new terms
are a “condition to access some of the new features enabled by the DMA”. Rivals
had criticised the fee, saying it would deter many existing free apps, which
don't pay any fees, from jumping ship.
“We are concerned Apple's new
business model makes it too hard for app developers to operate as alternative
marketplaces & reach their end users on iOS,” the European Commissioner for
Competition, Margrethe Vestager, said on social media.
Apple Inc said over the past
several months, it “has made a number of changes to comply with the DMA in
response to feedback from developers and the European Commission”.
“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,” the company
said in a statement. “All developers doing business in the EU on the App Store
have the opportunity to utilize the capabilities that we have introduced,
including the ability to direct app users to the web to complete purchases at a
very competitive rate.”
The company said it will “continue
to listen and engage” with the commission.
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