Apple in Breach of European Union’s Digital Markets Act
In a preliminary finding, the European Commission has determined that Apple is in breach of the European Union’s Digital Markets Act (DMA). The Commission has also opened a new case against Apple over concerns regarding its new contractual requirements for third-party app developers and app stores, which are believed to be in violation of the DMA.
The DMA, which came into effect in November 2022, mandates that companies operating app platforms in the EU must allow third-party app developers to inform their customers about alternative, cheaper purchasing options. This includes steering customers towards those offers and enabling them to make purchases through those channels.
During its investigation, the Commission examined Apple’s App Store practices and found that the company does not allow developers to freely direct their customers away from the App Store. Instead, Apple permits third-party apps to include links within their apps that redirect users. However, the Commission deems this approach too restrictive. Additionally, the Commission criticized the fees that Apple charges developers for acquiring new customers, stating that they exceed what is necessary.
European Commissioner Thierry Breton expressed concerns about Apple’s practices, stating that the company has been limiting consumer choices and opportunities for too long. He emphasized that steps are being taken to ensure compliance with the DMA.
Apple now has 12 months to comply with the DMA requirements, starting from March 25, 2024. Failure to do so could result in a fine of up to 10 percent of Apple’s global revenue, which amounts to approximately $38 billion based on recent earnings. In cases of repeated infringements, the fine could be increased to 20 percent. It is worth noting that Apple was fined $1.84 billion in March 2024 for similar anti-steering practices following a lawsuit filed by Spotify.
Last week, Apple announced that it would not launch its upcoming Apple Intelligence features in Europe due to the requirements set forth in the DMA. This decision reflects the challenges that companies face in adapting to the new regulations.
It is important to note that Apple is not the only company under investigation for DMA violations. The European Commission is also looking into the business practices of Google and Meta, indicating a broader effort to ensure fair competition and consumer choice in the digital market.
In conclusion, the European Commission’s preliminary finding that Apple is in breach of the DMA highlights the need for greater transparency and openness in app store practices. The Commission’s actions aim to promote fair competition, protect consumer rights, and provide developers with more opportunities to reach customers through alternative channels. As Apple and other tech giants navigate these regulatory challenges, it remains to be seen how the digital market landscape will evolve in the coming years.
