Apple has imposed unfair restrictions on developers of applications for its App Store in violation of a new European Union law aimed at promoting competition in the technology sector, regulators in Brussels said on Monday.
The tariffs further escalated a fight between Apple, which says its products are designed in the best interests of consumers, and EU regulators, who say the company is unfairly using its size and considerable resources to stifle competition.
Apple is the first company to be accused of violating the Digital Markets Act, a law passed in 2022 that gives European regulators broad powers to force the biggest “online gatekeepers” to change their business practices.
After opening an investigation in March, EU regulators said Apple was imposing illegal restrictions on companies that make games, music services and other apps. Under the law, also known as DMA, Apple cannot control how companies communicate with customers about sales and other offers and content available outside the App Store. The company faces fines of up to 10 percent of global revenue, with penalties of up to 20 percent for repeat violations, regulators said. Apple reported $383 billion revenue Last year.
“Today is a very important day for the effective implementation of the DMA,” said Margrethe Vestager, European Commission executive vice-president responsible for competition policy. “Apple’s App Store policies make developers dependent on the company and prevent consumers from learning about better offers.”
EU regulators said the allegations were preliminary and gave Apple a chance to respond. The final result will be announced in March.
Apple has defended its practices, saying its rules and fees are a fair trade-off for giving consumers such a large platform to reach. Developers can point customers to websites to make purchases outside of the App Store, the company said.
“Over the past several months, in response to feedback from developers and the European Commission, Apple has made several changes to comply with DMA,” Apple said in a statement. “We believe our plan complies with the law.”
The charges underscore the risk to the company’s business from increased regulatory scrutiny around the world. In the US, Apple has been sued by the Department of Justice for allegedly holding an illegal monopoly on the smartphone market. It has also argued in US federal court that developers are entitled to take up to 27 percent of certain app sales through third-party payment systems, which it argues violates a 2021 judicial ruling.
Japan and Britain, which are no longer part of the European Union, have advanced rules to limit Apple’s control over the App Store.
The European Union has long been at the center of regulatory efforts to control the world’s biggest tech companies, but the Digital Markets Act gives authorities new powers to intervene without the process of filing traditional antitrust cases, which can take years. to solve Amazon, Google and Meta are also under investigation for violating the law.
Another new law, called the Digital Services Act, gives regulators more power to regulate social media platforms and illegal online content. Meta, TikTok and X are under investigation for potential violations.
The intense scrutiny is causing companies to consider what products and services to roll out across the 27-nation bloc. Apple said on Friday that it will not release a software update for iPhone users in the European Union that includes new artificial intelligence features due to “regulatory uncertainty.” Meta didn’t launch its Threads service until five months after it became available in the US, citing regulatory concerns.
But the EU is one of the biggest markets for Apple and other tech companies, giving them few options other than making changes to comply with the new laws.
In January, Apple declared A list of changes to its app store policies in an effort to comply with the Digital Markets Act, including allowing users to download rival app stores for the first time. Apple has reduced the service fee it charges companies selling through the App Store from 30 percent to 17 percent.
Apple has made other changes that upset developers, including charging developers a 50 euro cent “core technology fee” for each download after a million or more downloads within 12 months. Fortnite’s maker Spotify and Epic Games said the changes amounted to a new anti-competitive tax and called for regulators to intervene.
The European Commission said it was launching a separate investigation into Apple’s technology charges, which it said “may fall short of ensuring Apple’s effective compliance with its obligations under the DMA”.
Apple and other companies are expected to try to narrow the scope of the Digital Markets Act in court. The outcome may take years but could set a precedent for future regulation of the technology sector and the digital economy.
