Apple’s App store is in breach of fair competition legislation, the European Commission announced in its preliminary findings on Monday, with a third new case against the tech giant having also been announced.
The preliminary findings specifically concern a non-compliance case regarding the tech giant’s App store. According to the Commission, Apple’s App store does not allow other app developers to freely steer potential consumers to alternative content or offers outside its store. This is in breach of the EU’s Digital Markets Act (DMA), which has been legally binding since March.
"'Act different' should be their new slogan," says European Commissioner for Internal Market Thierry Breton, in a post on X (formerly Twitter). "For too long Apple has been squeezing out innovative companies; denying consumers new opportunities and choices," he concludes.
“Act different” should be their new slogan🍏
For too long @Apple has been squeezing out innovative companies — denying consumers new opportunities & choices. Today we are taking further steps to ensure AppStore & iOS comply with #DMA pic.twitter.com/e741oV9r9l — Thierry Breton (@ThierryBreton) June 24, 2024
The Digital Markets Act (DMA) is a set of rules aimed at ensuring fair competition within the digital market, allowing smaller enterprises to have the potential to enter and thrive in the sector. The rules specifically apply to companies the EU deems as 'gatekeepers'. These are essentially those with large digital platforms which are key for the operation of the digital economy.
In a press release, the Commission outlined the main business terms it believes to infringe the DMA. This includes restrictions of communication of features such as pricing, restrictions to access to external channels, and excess fees for developers, which the commission believes "to go beyond what is strictly necessary."
Apple now has the right to examine the Commission’s investigation and reply to its initial findings in writing. In case the Commission’s initial views are confirmed, it has until 25 March 2025 to adopt its final decision.
A proven non-compliance with the DMA can result in multiple consequences for gatekeepers. This includes periodic payments of up to 5% of daily turnovers, or fines of up to 10% of the total annual turnover. For the case of a repeated breach, the latter can go up to 20%. Apple reported $383 billion in revenue last year, according to the data platform Statista.
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In addition to its findings, the Commission announced it would initiate its sixth non-compliance case, the third one against Apple.
"We are concerned that Apple designed its new business model to discourage app developers and end users from taking advantage of the opportunities afforded to them by the DMA," explained European Commissioner for Competition Margrethe Vestager at the European Competition Network conference today.
The case will investigate whether Apple’s new contractual terms for third-party app developers and app stores infringe the DMA rules.
Among this is an investigation into Apple's Core Technology Fee, a fee third-party developers must pay per app downloaded. Additionally, the Commission will evaluate the steps a user must take to install alternative app stores and apps, as well as Apple’s eligibility criteria for developers.
In early March, the Commission announced €1.8 billion fine against Apple for abusing its dominant position within the music streaming sector.
The Commission has identified 7 gatekeepers, namely Alphabet (Google), Amazon, Apple, ByteDance (TikTok), Meta, Microsoft, and most recently Booking.com. It has started a total of 6 non-compliance cases relating to the DMA against Alphabet, Meta, and Apple, and has previously also announced an investigation into Amazon.
