Brussels, June 24, 2024 – The European Union’s antitrust regulators formally charged Apple Inc. on Monday with violating the bloc’s stringent technology rules, a move that could lead to significant financial penalties for the iPhone maker. Apple is concurrently facing a separate investigation into newly imposed fees on app developers.
The European Commission, the EU’s primary antitrust and technology regulator, disclosed that it had issued preliminary findings to Apple following an investigation initiated in March.
This charge marks the Commission’s first under the landmark Digital Markets Act (DMA), legislation designed to curb the dominance of Big Tech and promote fair competition for smaller entities. The Commission has until March next year to deliver a final decision. Violations of the DMA could result in fines up to 10% of a company’s global annual revenue.
EU Antitrust Chief Margrethe Vestager highlighted concerns with Apple’s new business terms, stating they do not meet DMA standards. Apple has the opportunity to avoid fines by adjusting its terms to address these issues.
“As they stand, we believe these new terms do not permit app developers to communicate freely with their end users and to finalize contracts with them,” Vestager remarked at a conference. She emphasized that it is up to Apple to determine how to comply with the DMA, rather than receiving specific directives from the Commission.
Apple responded by noting several changes made in recent months to align with the DMA, based on feedback from both app developers and the Commission. “As we have done routinely, we will continue to listen and engage with the European Commission,” Apple stated in an email.
The Commission criticized Apple’s practice of allowing app developers to steer customers only through ‘link-outs,’ where users are redirected to a web page to finalize transactions. Additionally, it condemned the fees Apple charges for facilitating initial customer acquisitions via the App Store, arguing that these fees exceed what is necessary for remuneration.
“We are confident our plan complies with the law and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created,” Apple said.
New Contractual Requirements
The EU executive also announced the launch of an investigation into Apple’s new contractual requirements for third-party app developers and app stores, questioning their necessity and proportionality. This investigation focuses on Apple’s core technology fee, the multi-step process required to download and install alternative app stores on iPhones, and the eligibility criteria for developers to offer alternative app stores or directly distribute apps from the web on iPhones.
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Apple’s introduction of new fees in March within the EU, including a core technology fee for major app developers even if they do not use Apple’s payment services, has sparked criticism from companies like “Fortnite” creator Epic Games.
Vestager also criticized Apple’s recent decision to delay the launch of AI-powered features in the EU, attributing the delay to the DMA. She suggested that Apple’s claims implied potential anti-competitive behavior regarding its AI integration.
