Key Points:
- The Commission criticized Apple’s business terms and fees charged to app developers.
- Apple has made changes to comply with the DMA and plans to continue engaging with the Commission.
- A new investigation into Apple’s contractual requirements for third-party app developers and stores has been launched.
- Criticism from Epic Games and others followed Apple’s introduction of new fees in March.
European Union antitrust regulators have charged Apple with breaching the bloc’s tech rules, which could result in significant fines for the iPhone maker. This charge, announced on Monday, is the first under the EU’s Digital Markets Act (DMA), which aims to curb the power of Big Tech and create a level playing field for smaller competitors.
The European Commission, the EU’s antitrust and technology regulator, issued its preliminary findings to Apple following an investigation initiated in March. The Commission has until March next year to issue a final decision. Violations of the DMA could lead to fines of up to 10% of a company’s global annual revenue.
EU antitrust chief Margrethe Vestager highlighted issues with Apple’s new terms, stating they fall short of DMA compliance. Apple can avoid fines by addressing these concerns through business term modifications. Vestager noted, “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.”
Apple responded, stating it has made several changes in recent months to comply with the DMA based on 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.
The Commission criticized Apple’s business terms, particularly the ‘link-outs’ policy, which allows app developers to include a link in their app redirecting customers to a webpage to conclude a contract. Additionally, it scrutinized the fees Apple charges for facilitating the initial acquisition of new customers via the App Store, claiming these fees exceed what is necessary for such remuneration. Apple defended its new business terms, claiming compliance with the law and estimating that “more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created.”
In addition to the DMA charge, the EU executive has opened a new investigation into Apple’s contractual requirements for third-party app developers and app stores. This probe will examine whether Apple’s core technology fee, the multi-step process to download and install alternative app stores on iPhones, and the eligibility requirements for developers to offer alternative app stores or distribute apps directly from the web are necessary and proportionate.
Apple introduced these new fees in March in the EU, including a core technology fee for major app developers, prompting criticism from companies like Epic Games, the creator of “Fortnite.” Vestager also criticized Apple’s recent announcement that it would delay the launch of its AI-powered features in the EU, blaming the DMA. She suggested that Apple’s claim that the DMA made its AI integration anti-competitive was unfounded.
