European Commission Accuses Apple of Breaching Digital Markets Act

In a major blow to the US tech giant Apple, the European Commission on Monday has informed the US company of its preliminary view that its App Store rules were in breach of the Digital Markets Act (DMA), as they prevented app developers from freely steering consumers to alternative channels for offers and content.

The Commission also opened a new non-compliance procedure against Apple over concerns that its new contractual requirements for third-party app developers and app stores, including Apple’s new “Core Technology Fee,” fall short of ensuring effective compliance with Apple’s obligations under the DMA.

 “Under the DMA, developers distributing their apps via Apple’s App Store should be able, free of charge, to inform their customers of alternative cheaper purchasing possibilities, steer them to those offers and allow them to make purchases,” the Commission said.

Apple currently has three sets of business terms governing its relationship with app developers, including the App Store’s steering rules. If the charges are proved, Apple could be fined up to 10% of its total worldwide revenue which stood at $383 billion in 2023.

DMA, which came into effect in March this year, has established new rules governing the behaviour of Apple and five other major IT companies – Alphabet, Amazon, ByteDance, Meta and Microsoft – the six “gatekeepers” designated by the Commission in September last year, directing them to fully comply with all DMA obligations by 7 March 2024.

In a post on X, EU’s Executive Vice President in-charge of Competition Policy Margrethe Vestager said that they were concerned about Apple’s new business model which makes it too hard for app developers to operate as alternative marketplaces & reach their end users on iOS.

She further noted that they have sent preliminary findings to Apple asserting that Apple did not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.

“We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and side-loading. The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts,” she added.

Apple Denies Charges

Apple was informed of the bloc’s preliminary findings and has the chance to defend its business practices. The commission said it will make a final decision on whether Apple is non-compliant by March 2025.

However, Apple denied the charges saying that 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,” Apple said in a statement on Monday.

“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 statement added.