EU says Apple is breaking its rules, and threatens billions in fines

Europe Apple (Copyright 2019 The Associated Press. All rights reserved)
Europe Apple (Copyright 2019 The Associated Press. All rights reserved)

The European Union has accused Apple of breaking its new rules – and threatened billions in fines as punishment.

Last month, the EU’s Digital Markets Act (DMA) went into force, with an aim of controlling the behaviour of big technology companies and regulating online marketplaces. It has led to conflict between the EU and many of the firms the legislation covers, including Apple.

Now EU regulators have said that Apple is not abiding by the new rules of the act. It is still preventing software developers on the App Store from pointing their users to other ways of downloading their apps, it says.

That was one part of a host of criticisms launched by the EU as it revealed preliminary findings of an investigation.

Thierry Breton, commissioner for internal market of the European Union, said that “for too long Apple has been squeezing out innovative companies, denying consumers new opportunities & choices”. “‘Act different’ should be their new slogan,” he joked, in reference to Apple’s old “think different” advertising campaign.

The commission, the bloc’s executive arm, said Apple’s rules for its App Store “prevent app developers from freely steering consumers to alternative channels for offers and content”.

Apple now has a chance to respond to the findings, which the commission will assess. It must make a final decision on Apple’s compliance by March 2025. The company could face fines worth up to 10 per cent of its global revenue – which would amount to $38bn based on 2023’s accounts – or daily penalties.

“We are concerned Apple’s new business model makes it too hard for app developers to operate as alternative marketplaces and reach their end users on iOS,” the European commissioner for competition, Margrethe Vestager, said on social media.

The commission also kept up the pressure on Apple, simultaneously opening a new investigation into the company’s compliance with the DMA looking at new contractual terms that Apple has offered app developers.

Regulators zeroed in on a “core technology fee” of 50 euro cents (42p) 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. Rivals had criticised the fee, saying it would deter many existing free apps, which do not pay any fees, from jumping ship.

Apple 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 per cent 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 utilise 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.

The EU’s announcement came soon after Apple said that three of the main new features announced at its Worldwide Developers Conference two weeks ago would not be coming to European users immediately. Apple said it was concerned that the tools – allowing users to control their iPhone with their Mac, share other iPad screens and its new Apple Intelligence AI tools – would not be compatible with European regulation.

“Specifically, we are concerned that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security,” Apple said in a statement. “We are committed to collaborating with the European Commission in an attempt to find a solution that would enable us to deliver these features to our EU customers without compromising their safety.”

The new features are slated to roll out to users with a software update later this year, probably in September. But Apple said it would not be able to do so for European users in 2024.

Additional reporting by agencies