Apple’s regulatory cloud is getting thicker

Apple’s ( AAPL ) legal woes intensified on Monday with news that European Union regulators found Apple violated a new law aimed at reining in tech giants.

The European Commission said it has informed Apple that the rules of Apple’s lucrative App Store violate the Digital Markets Act by illegally preventing software developers from telling customers how to access content outside the app store.

The regulator also announced it had launched a separate investigation into Apple’s practice of charging a “core technology fee” for iOS apps available in the EU.

The increased scrutiny abroad comes as Apple defends itself in the U.S. against antitrust charges from the U.S. Department of Justice and 16 state attorneys general. In March, they sued Apple, accusing it of using illegal tactics to maintain a monopoly in the smartphone market.

Apple is fighting the US lawsuit and said in a statement on Monday that it had made a number of changes to comply with the new EU law and “we are confident that our plan is lawful.”

Investors shrugged off the news, sending Apple shares up more than 1%.

The law, which the EU says Apple violated, came into force in March. It targets six Big Tech companies that the EU considers gatekeepers – Apple, Amazon (AMZN), Alphabet (GOOG, GOOGL), ByteDance, Microsoft (MSFT) and Meta (META) – and imposes stricter rules on competition .

The law aims to stop the most dominant technology companies from blocking smaller rivals from entering certain markets.

Apple is the first tech giant to receive a DMA infringement complaint from the European Commission.

DMA allows Apple to charge developers fees for new customers who sign up through the App Store.

However, the law prohibits Apple from blocking developers from providing alternative ways to purchase their content.

And that’s exactly what Apple regulators said.

“Under the DMA, developers who distribute their apps through Apple’s App Store should be able to inform their customers, free of charge, about alternative, cheaper purchase options, direct them to those offers, and enable them to make purchases,” the commission said in its statement. announcement explaining its findings.

The story continues

Apple said in a statement that it estimates that more than 99% of developers would pay Apple the same or lower fees under the new business terms it created.

“All developers doing business in the EU on the App Store have the opportunity to take advantage of the features we have introduced, including the ability to direct app users online to make purchases at very competitive rates.”

Violations of the DMA carry serious consequences, allowing fines of up to 10% of a company’s global annual revenue. In the case of Apple, global revenues in 2023 reached $383 billion.

Apple does not separate App Store revenues in its financial statements. However, the growing services category, which includes store revenues, reached $85 billion in the same year.

The EC’s statement significantly expanded the financial risk Apple faces from global antitrust authorities.

The commission said it had conducted a further investigation to determine whether Apple’s fee, which charges developers €0.50 for app downloads exceeding 1 million, violated the DMA.

Earlier this year, the European Commission revealed the fine imposed on Apple in connection with another lawsuit it filed under antitrust laws.

The case, brought by Spotify ( SPOT ), involved Apple’s regulations that prohibited music streaming apps from tricking users into paying for content outside the app store.

The European Commission fined Apple $1.95 billion for this practice. Apple is appealing this decision.

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