The European Commission is preparing to charge Apple with violating the Digital Markets Act (DMA) for stifling competition in the mobile app market. This marks the first time EU regulators will use these new rules to curb the activities of a major technology company.
Allegations Against Apple
According to the Financial Times, the European Commission found that Apple is not fulfilling its obligations to allow developers to direct users to alternative offers outside the App Store without charging a commission. An announcement about the charges is expected in the coming weeks, according to sources.
These charges will be the first publicly announced against a tech company under the Digital Markets Act. This landmark legislation is designed to force big tech corporations controlling digital markets to open up their business to competition in the EU. In March, the European Commission launched investigations into Apple, Alphabet, and Meta based on the DMA’s powers.
Regulators have so far made only preliminary conclusions, and Apple still has the opportunity to adjust its activities. If Apple makes necessary changes, the European Commission may reconsider any final decision. Additionally, the timing of the announcement of charges may also change.
If Apple is found to be in violation of the DMA, it faces daily fines for non-compliance of up to 5% of the company’s average daily turnover, which currently stands at more than $1 billion.
Broader Context and Reactions
These actions by the European Commission come amid increased scrutiny by antitrust authorities in various countries regarding large technology companies and their dominant market positions. In March, an antitrust case was initiated in the United States against Apple due to the alleged use of its influence in the smartphone market to suppress competitors and limit consumer choice. Additionally, Epic Games, which filed a lawsuit against Apple in 2020 over its App Store policies, is awaiting a ruling from a California federal judge.
In January, Apple announced historic changes to its iOS mobile software, App Store, and Safari browser for users in the EU. These changes were an attempt to placate regulators in Brussels and meant Apple would allow users to access rival app stores and download apps from other sources. The changes included reducing the commission companies pay for using the App Store to sell digital goods and services from 30% to 15%.
Simultaneously, Apple introduced a series of new fees for app developers in Europe, including a “core technology fee” of 50 cents for developers with more than 1 million users for each user’s first contribution. The company will also charge an additional 3% commission from companies using its payment processing. Some developers have already said they may incur higher costs as a result of these changes. The European Commission may also bring charges in connection with these new commissions, according to sources, adds NIXSolutions. Apple representatives declined to comment.
Regulators may decide to bring charges against other tech giants as well. The commission is already investigating whether Google supports its own application store and whether Meta uses personal data of Facebook users for targeted advertising. We’ll keep you updated as these investigations progress.