Apple hit by EU antitrust allegations, now facing new investigation

Apple has been formally accused by EU antitrust authorities of violating EU technology regulations. This significant move could result in a significant fine for the iPhone maker, which is also facing another investigation into new fees imposed on app developers.

The European Commission, the EU’s antitrust and technology regulator, announced on Monday that it had forwarded its preliminary findings to Apple following an investigation launched in March. The allegation marks the first time the Commission has invoked the landmark Digital Markets Act (DMA), which aims to limit the power of the largest technology companies and ensure a fair playing field for smaller competitors. The commission has until March next year to issue a final decision.

According to Reuters, DMA violations may result in fines of up to 10% of a company’s global annual revenue. The head of the EU antitrust office, Margrethe Vestager, drew attention to problems with Apple’s new terms, pointing out that they are inconsistent with the DMA. Vestager stressed that Apple could avoid fines if it addressed the concerns by changing its trading terms.

“As it stands, we believe that these new terms do not allow application developers to communicate freely with and enter into contracts with end users,” Vestager said at the conference. She also noted that it is up to Apple to decide how to comply with the DMA, rather than recommending specific actions.

Apple responded to the allegations by highlighting changes it has made over the past few months to comply with DMA requirements after reviewing feedback from app developers and the Commission. “As we have always done, we will continue to listen and work with the European Commission,” Apple said in an email.

Related: Apple Pauses Rollout of Key AI Features in EU Due to Regulatory Concerns

The commission criticized Apple’s current trading terms, which allow app developers to target customers only through “link-outs.” This means that developers can include a link in their app that redirects customers to a website to conclude a contract. Additionally, the Commission condemned the fees Apple charges developers to facilitate initial customer acquisition through the App Store, arguing that they exceed the amount necessary to provide such services.

“We are confident that our plan complies with the law, and we estimate that more than 99% of developers would pay Apple the same or lower fees under the new business terms we created,” Apple said.

New contractual requirements under analysis

In addition to the antitrust charges, the EU executive is launching an investigation into Apple’s new contractual requirements for third-party app developers and app stores. This investigation will assess whether these requirements are necessary and proportionate.

Key issues include Apple’s core technology fee, the multi-step user journey required to download and install alternative app stores on iPhones, and the eligibility criteria for developers to offer alternative app stores or distribute apps directly from the Internet on iPhones. Apple introduced new fees in the EU in March that include an underlying technology fee charged by major app developers, even if they don’t use any of Apple’s payment services. The move was criticized by companies including Epic Games, the creator of “Fortnite.”

Source: Reuters