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Apple to be first big tech company charged under new EU digital laws

If in breach of the Digital Markets Act, Apple faces daily penalties of up to 5% of its average daily worldwide turnover

The European Commission believes Apple is not allowing app developers to “steer” users to offers outside its App Store. Photograph: Getty

Fri Jun 14 2024 - 19:32

Brussels is set to charge Apple over allegedly stifling competition on its mobile app store, the first time EU regulators have used new digital rules to target a Big Tech group.

The European Commission has determined that the iPhone maker is not complying with obligations to allow app developers to “steer” users to offers outside its App Store without imposing fees on them, according to three people with close knowledge of its investigation.

The charges would be the first brought against a tech company under the Digital Markets Act, landmark legislation designed to force powerful “online gatekeepers” to open up their businesses to competition in the EU. The commission, the EU’s executive arm, said in March it was investigating Apple, as well as Alphabet and Meta, under powers granted by the DMA. An announcement over the charges against Apple was expected in the coming weeks, said two people with knowledge of the case.

These people said regulators have only made preliminary findings, and Apple could still take actions to correct its practices, which could then lead regulators to reassess any final decision. They added the timing of any announcement could also shift.

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The EU could also decide to announce charges against other tech groups, with regulators still investigating whether Google parent Alphabet is favouring its own app store and Facebook owner Meta’s use of personal data for advertising.

If found to be breaking the DMA, Apple faces daily penalties for noncompliance of up to 5 per cent of its average daily worldwide turnover, which is currently just over $1 billion (€930 million). The move comes as competition watchdogs around the world increase their scrutiny of Big Tech companies and their market dominance. In March, the US brought an antitrust case against Apple for allegedly using its power in the smartphone sector to squash rivals and limit consumer choice.

Epic Games, which sued Apple over the App Store in 2020, is also awaiting a decision from a California federal judge on whether Apple failed to comply with a US injunction prohibiting its steering rules, following a series of court hearings over recent weeks. In January, Apple announced historic changes to its iOS mobile software, App Store and Safari browser in the EU.

The changes were an effort to placate regulators in Brussels and meant Apple would allow users to access rival app stores and download apps from other sources. The changes also included slashing the fee paid by companies using the App Store to sell digital goods and services from 30 per cent to 17 per cent.

However, the EU is also looking at whether these fee changes properly adhere to its new digital rules. Apple introduced new charges in Europe, including a “core technology fee” of 50 cents on developers with apps that have more than one million users for every first instalment by a user. Apple will also charge an additional 3 per cent fee to app developers that use its payment processor.

Some developers have argued they could face higher charges as a result of the fee changes. The EU could also announce initial charges over these developer fees, people familiar with the commission’s thinking said.

According to analysis by Sensor Tower, consumer spending on Apple’s App Store throughout the second quarter of 2024 was “relatively flat”, suggesting the EU rules have yet to affect the company’s bottom line.

Apple declined to comment but pointed to an earlier statement that said: “We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations.” The EU declined to comment. – Copyright The Financial Times

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