Apple Breaks New European Digital Law – Capital Brief

The news: The European Union has told Apple that its App Store violates the EU’s Digital Markets Act (DMA), making Apple the first company to violate a new, sweeping digital competition law.

Numbers: The commission could fine Apple up to 10% of its global revenue, which was $383 billion ($575 billion) last year, and in the case of repeated violations the fine could rise to 20%.

Context: In a statement, the European Commission said Apple’s App Store rules violate the DMA by preventing developers from directing consumers to alternative payment methods and charging excessive fees for in-app purchases made within seven days of registration via external links.

The preliminary findings follow an EU antitrust fine imposed on Apple in March of 1.8 billion euros for restricting streaming app developers.

The final decision is to be made by March 25, 2025.

Last week, Apple said it would delay the rollout of planned AI features in Europe due to regulatory concerns arising from the DMA.

What did they say: The commission also said it would examine Apple’s multi-step process for downloading alternative app stores on iPhones, as well as a new core technology fee charged to developers based on app downloads.

Apple said it has made changes over the past few months to comply with the DMA, saying most developers will pay the same or lower fees under the new terms.

“Today is a very important day for the effective enforcement of the DMA,” Margrethe Vestager, the Commission’s executive vice-president in charge of competition policy, said in a statement.

“The developer community and consumers are eager to offer alternatives to the App Store. We will conduct an investigation to ensure that Apple does not undermine these efforts.”