Apple Hit with EU Antitrust Charges, Now Faces New Probe

Apple has been formally charged by EU antitrust regulators for breaching the bloc’s technology rules. This significant move could lead to a substantial fine for the iPhone maker, which is simultaneously facing another investigation regarding new fees imposed on app developers.

The European Commission, the EU’s antitrust and technology regulator, announced on Monday that it had communicated its preliminary findings to Apple following an investigation initiated in March. This charge marks the first instance of the Commission invoking its landmark Digital Markets Act (DMA), which aims to curtail the power of major tech companies and ensure a fair playing field for smaller competitors. The Commission has until March next year to issue a final decision.

According to Reuters, violations of the DMA can result in a fine of up to 10% of a company’s global annual revenue. EU antitrust chief Margrethe Vestager pointed out issues with Apple’s new terms, indicating they do not comply with the DMA. Vestager emphasized that Apple could avoid the fine if it addresses the concerns by amending its business terms.

“As they stand, we think that these new terms do not allow app developers to communicate freely with their end users, and to conclude contracts with them,” Vestager stated at a conference. She also noted that it is up to Apple to determine how to comply with the DMA, not for her to prescribe specific actions.

Apple responded to the charges by highlighting the changes it has made over the past few months to comply with the DMA, following feedback from app developers and the Commission. “As we have done routinely, we will continue to listen and engage with the European Commission,” Apple said in an email.

Related: Apple Halts Rollout of Key AI Features in EU Amid Regulatory Concerns

The Commission criticized Apple’s current business terms, which allow app developers to steer customers only through ‘link-outs’. This means that developers can include a link in their app redirecting customers to a web page to conclude a contract. Furthermore, the Commission condemned the fees Apple charges developers for facilitating initial customer acquisition via the App Store, arguing they exceed what is necessary for such services.

“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,” Apple stated.

New Contractual Requirements Under Scrutiny

In addition to the antitrust charges, the EU executive is opening an investigation into Apple’s new contractual requirements for third-party app developers and app stores. This inquiry will assess whether these requirements are necessary and proportionate.

Key concerns include Apple’s core technology fee, the multi-step user journey required to download and install alternative app stores on iPhones, and the eligibility criteria for developers to offer alternative app stores or distribute apps directly from the web on iPhones. Apple introduced these new fees in the EU in March, which include a core technology fee for major app developers even if they do not use any of Apple’s payment services. This move has drawn criticism from companies like Epic Games, the creator of “Fortnite”, among others.

Source: Reuters