Brussels is preparing to charge Apple with stifling competition on its mobile app store, in what will be the first use of new EU digital regulations to target a major tech company. The European Commission has found that the iPhone maker is not complying with obligations to allow app developers to direct users to offers outside Apple’s App Store without imposing fees, according to those familiar with the investigation.
This action marks the first enforcement under the Digital Markets Act (DMA), legislation aimed at compelling dominant ‘online gatekeepers’ to open their platforms to competition within the European Union. The Commission signaled in March that it was investigating Apple, along with Alphabet and Meta, under the DMA. An official announcement of charges is anticipated within weeks.
Those aware of the case noted that the findings were preliminary, with Apple still having the opportunity to adjust its business practices. The timing of any charges might also be subject to change.
Other tech giants are under scrutiny as well, with the EU still investigating whether Google’s parent company Alphabet is giving preferential treatment to its app store and whether Facebook’s owner Meta is improperly using personal data for advertising purposes.
Penalties for non-compliance with the DMA could be significant, with Apple facing potential daily fines of up to 5 percent of its average daily global turnover, about $1 billion.
This move is part of a broader wave of increased regulatory scrutiny on Big Tech across the globe. For instance, the United States filed an antitrust lawsuit against Apple in March over claims of using its market position to suppress competitors and limit consumer choices.
The case comes amid broader efforts by Apple to address regulatory concerns. In January, Apple announced significant changes to its iOS software, App Store, and Safari browser in the EU, including allowing access to rival app stores and lowering fees from 30 percent to 17 percent for digital goods sales.
Despite these changes, the EU remains skeptical about whether Apple’s revised fee structures comply with the new digital rules. Apple’s new charges in Europe include a ‘core technology fee’ of 50 cents per initial app installment for developers with over 1 million users, along with an additional 3 percent fee for using its payment processor.
Some developers argue that the new fee structure could lead to higher overall charges. The EU may also consider additional charges over these fees, sources suggest.
According to Sensor Tower’s analysis, consumer spending on Apple’s App Store was ‘relatively flat’ in the second quarter of 2024, indicating that the new EU regulations have yet to significantly impact Apple’s financials.
An Apple spokesperson reiterated the company’s compliance with the DMA, expressing confidence in their plan and commitment to cooperate with the European Commission. The EU declined to comment.
Read more about the potential charges here.