EU Regulators Accuse Apple Under New Digital Markets Act Rules

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The European Union (EU) has come down hard on technology giant Apple in its first litigation under the bloc’s fresh and groundbreaking Digital Markets Act (DMA), a legislation aimed at holding tech powerheads accountable and preventing them from dominating electronic commerce. The sprawling regulatory framework penalizes those monopolizing digital markets with hefty financial consequences. Its implementation was followed by the initiation of multiple investigations, with some scrutinizing Google and Meta in addition to Apple.

London bore witness on Monday as EU regulators faced off against Apple, accusing the tech juggernaut of unreasonable prevention measures. They claim the iPhone creator prevents app developers from guiding customers to more affordable options outside the App Store ecosystem.

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This particular quarrel isn’t Apple’s first encounter with regulators. The company has been besieged by pressure from both sides of the Atlantic to dismantle certain competitive obstacles around its sought-after iPhone product line. The tensions that have been cultivating were further intensified by a sweeping antitrust lawsuit accusing Apple of unlawfully monopolizing the smartphone market. The charges, brought upon by the US Justice Department, alleged that Apple’s actions suffocated competition, stymied innovation and kept prices artificially high.

Application developers, like Spotify, have registered long-standing complaints about Apple’s insistent policy demanding subscriptions to be purchased exclusively through its iOS apps. As a result, Apple can extract a commission of up to 30 percent on those transactions. These grievances came to a head resulting in European regulators fining Apple a staggering $2 billion for favoring its music-streaming service over Spotify and other rivals.

The DMA’s provisions insist that app developers should be afforded the liberty to inform consumers about cheaper alternatives and guide them to those offers. Apple’s App Store rules, however, “unfairly obstruct developers from steering consumers toward alternative channels for offers and content,” says the European Commission, the EU’s governing body.

With the accusations brought to light, Apple now has an opportunity to present its rebuttal to the preliminary findings. The commission will be considering Apple’s case till March 2025, after which it will announce its final judgment. If found guilty of non-compliance, Apple faces the possibility of paying massive fines equating to as much as 10% of its global revenue, potentially amounting to billions of euros.

The toll of these regulatory battles has caused Apple to consider withdrawing certain features from the European territories due to the company deeming new regional rules excessively burdensome.

In tandem with this ongoing investigation, the European Commission has also opened a new case scrutinizing the contractual terms offered by Apple to app developers. The focus in this case is a “core technology fee” charged by Apple each time an application is downloaded and installed from external sources. Critics suggest that this fee acts as a deterrent for free apps to consider alternatives, contributing to Apple’s market dominance.

In response to this, Apple Inc. states that it has made several changes over the past months to comply with the DMA responding to developer feedback and the European Commission. They assert that under their proposed business terms, over 99% of developers would maintain the same or lesser fees, and all developers operating in the EU could take advantage of the capabilities provided by Apple, inclusive of guiding users to the web for purchases at competitive rates.

The company reassures that it “will continue to listen and engage” with the Commission’s concerns. As for the EU, it’s refocusing its ongoing investigation from 2020 about the tech giant’s in-app purchasing system and will concentrate on the DMA’s scope, honing in on what Apple is specifically prohibited from doing.