Technology
Monday, June 24th, 2024 3:14 pm EDT
Key Points
- EU Breach of DMA by Apple: European Union regulators found Apple in breach of the Digital Markets Act (DMA) for not allowing App Store customers to be directed to alternative purchasing options and imposing restrictive conditions on app developers.
- New Investigation and Potential Penalties: The European Commission has opened a new probe into Apple’s contractual terms with developers and noted that Apple could face fines up to 10% of its global annual turnover if found in violation of the DMA.
- Continued EU Scrutiny and App Store Changes: Despite Apple’s recent changes to allow app downloads from websites and third-party stores, EU regulators are still concerned about Apple’s practices, such as charging a “core technology fee” and the steps required for alternative app store downloads. The EU continues to scrutinize Apple’s compliance with the DMA.
On Monday, European Union regulators announced that Apple is in violation of the new tech rules established under the Digital Markets Act (DMA) by not permitting customers of its App Store to be directed to alternative options. The European Commission, the EU’s executive arm, also revealed the initiation of a new investigation into Apple concerning its recent contractual terms with developers.
This action follows an investigation launched in March by the EU into major tech companies, including Apple, Alphabet, and Meta, under the DMA. This landmark law aims to curb the power of Big Tech firms, with anti-steering rules being a significant area of focus. These rules prohibit tech companies from preventing businesses from informing users about cheaper product options or subscription services outside of an app store.
In their preliminary findings, regulators stated that Apple’s App Store rules inhibit app developers from freely guiding consumers to alternative channels for offers and content. Apple currently allows app developers to provide a link that directs users to a webpage for content purchases, such as subscriptions. However, this method is encumbered by restrictions imposed by Apple, limiting developers’ ability to communicate, promote offers, and finalize contracts through their preferred distribution channels.
Additionally, the regulators criticized the fees Apple charges developers for acquiring new customers via the App Store, stating these fees exceed what is strictly necessary. In response, Apple contended that its changes within the EU are in compliance with the DMA, asserting that over 99% of developers would pay the same or lower fees under the new business terms Apple has established. Apple emphasized that all developers conducting business in the EU on the App Store can direct users to the web for purchases at competitive rates.
Apple faces potential fines of up to 10% of its total worldwide annual turnover if found in breach of the DMA. This scrutiny is part of a broader pattern, as the EU previously imposed a €1.8 billion ($1.93 billion) antitrust fine on Apple in March for allegedly abusing its dominant position in the market for music streaming app distribution, with steering rules also being a focal point in that case.
In anticipation of the DMA, Apple has made significant modifications to its App Store practices within the EU, including allowing apps to be downloaded from websites and third-party app stores on its devices. Despite these changes, the commission has raised concerns about certain new practices. For instance, Apple still imposes a “core technology fee” of €0.50 ($0.54) per app installed for downloads outside its App Store. The commission is investigating whether this fee structure complies with the DMA.
Furthermore, the regulators are examining the steps Apple requires users to take to download alternative app stores or apps and whether these procedures align with the bloc’s regulations. The commission will also assess whether the eligibility criteria related to offering alternative app stores or directly distributing apps from the web on iPhones comply with the DMA.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/24/apple-app-store-rules-are-in-breach-eu-tech-rules-regulators-say.html
