Apple accused of violating new EU technological competition rules

“Control is key to ensuring app developers are less dependent on service providers’ app stores and consumers are aware of better offers,” wrote Margrethe Vestager, the EU’s executive vice president in charge of competition policy.

The EU will make a final decision on the matter by March, with the possibility of fining Apple up to 10 percent of its global revenues. Apple, which saw revenue of $383.3 billion in fiscal 2023, said it would continue to listen and cooperate with the European Commission.

The allegations are the latest in a series of regulatory challenges facing Apple as governments around the world scrutinize the company’s use of its enormous market power.

In March, the Department of Justice and the attorneys general of 15 states and the District of Columbia sued Apple, accusing the company of violating federal antitrust law. Antitrust experts say the case raises issues similar to those raised by EU regulators. European findings against Apple may strengthen the position of US prosecutors.

In March, the EU fined Apple nearly $2 billion for “abusing” its control over music streaming services by eliminating competition through its app store in response to an antitrust complaint filed by rival Spotify.

Apple has been neck and neck with AI chipmaker Nvidia and Microsoft in the rankings of the world’s most valuable companies, and all three have occupied the top spots in recent weeks. On Monday, Apple’s market capitalization hovered around $3.2 trillion.

Experts say the European Commission’s indictment signals that regulators are serious about forcing Apple to open its app store to meaningful competition. Apple’s current fee structure won’t be enough to satisfy regulators, said Gene Kimmelman, who was deputy attorney general at the Justice Department early in Biden’s term.

“European regulators have made clear that Apple must completely change and possibly eliminate most of the fees it imposes on developers and people seeking to open competing app stores,” Kimmelman said.

The EU questioned several of Apple’s policies against app developers, such as preventing them from providing in-app pricing information or promoting certain offers. It also highlights the policies used to connect clients to other apps, as well as specific fees charged by Apple.

The charges come four months after the EU launched an investigation that focused on Apple and Alphabet’s regulatory leadership.

Apple said in a statement that it had made a number of changes in recent months after receiving feedback from developers and European regulators. The company said all developers doing business in the EU on the app store can take advantage of the company’s new features, including the ability to direct users to the network at competitive rates.

“We are confident that our plan is legal and estimate that more than 99% of developers would pay Apple the same or lower fees under the new business terms we have created,” the company said in a statement.

Rebecca Haw Allensworth, a professor at Vanderbilt Law School, said Monday’s announcement reflects an ongoing process in which EU regulators are ironing out the details of how to interpret and apply the Digital Markets Act.

“We will find out exactly what that means during this period,” she said. “There has to be some interpretation back and forth.”

The EU also said it had opened a new investigation into Apple’s contract terms with developers. Specifically, it is considering a fee of half a euro (about 54 cents) that developers must pay for each app they install, and an Apple membership program for developers. It also examines the “multi-step user journey” required to download and install an alternative app store on iPhones.

Shira Ovide helped prepare this report.