Apple is imposing unfair restrictions on app developers for its App Store, violating new European Union laws aimed at encouraging competition in the technology industry, regulators in Brussels say. knew on Monday.
The allegations further escalate the row between Apple, which says its products are designed in the best interests of customers, and EU regulators, who say the company is using its and its considerable resources unfairly restrict competition.
Apple is the first company to be charged with violating the Digital Markets Act law is passed in 2022, giving European regulators carte blanche to force the biggest “online gatekeepers” to change their business practices.
After starting an investigation in March, EU regulators said Apple was placing illegal restrictions on companies that make games, music services and other apps. . Under the law, also known as the DMA, Apple cannot restrict how companies communicate with customers about discounts and other offers and content available outside of the App Store. The company faces fines of up to 10% of global revenue, with fines up to 20% for repeated violations, regulators said. Apple reported revenue of $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 in charge of competition policy. She said Apple’s App Store policies make developers more dependent on the company and blind consumers to better deals.
EU regulators said the allegation was preliminary and gave Apple a chance to respond. The final decision will be announced next March.
Apple defends its practices, saying its rules and fees are a fair trade-off for providing such a large platform to consumers. The company said developers can direct consumers to websites for purchases outside of the App Store.
“Over the past several months, Apple has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission,” Apple said in a statement. “We are confident that our plan complies with the law.”
The allegations highlight risks to the company’s business from increased regulatory scrutiny around the world. In the United States, Apple is being sued by the Department of Justice, claiming it has an illegal monopoly on the smartphone market. They are also arguing in US federal court that they are entitled to take up to 27% of certain app sales through third-party payment systems, which the developers say violates the ruling. Judiciary 2021.
Japan and Britain, no longer part of the European Union, also have enhanced regulations that limit Apple’s control over the App Store.
The European Union has long been at the center of regulatory efforts to rein in the world’s biggest tech companies, but the Digital Markets Act gives officials new powers to intervene without requiring the filing of lengthy traditional antitrust lawsuits, which can take years to resolve. handle. Amazon, Google and Meta are also being investigated 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 possible violations.
The increased scrutiny appears to be forcing companies to consider what products and services to release across the 27-nation bloc. On Friday, Apple said it would not release software updates to iPhone users in the European Union that include new artificial intelligence features because of “regulatory uncertainty.” Meta didn’t release its Threads service on the block until five months after it became available in the US, citing regulatory concerns.
But the European Union is one of the biggest markets for Apple and other tech companies, leaving them with little choice but to make changes to comply with the new law.
In January, Apple announced list of changes to 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 also reduced the service fee companies charge when selling through the App Store to 17%, from 30%.
Apple has made other changes that have upset developers, including charging a “core technology fee” of 50 euro cents for each download of their app after it has been downloaded once. million times or more within 12 months. Spotify and Epic Games, the maker of Fortnite, are among the companies that said the changes amount to a new anti-competitive tax and called on regulators to intervene.
The European Commission said it was starting a separate investigation into Apple’s technology fees, saying it may “fail to ensure effective compliance with Apple’s obligations under the DMA”.
Apple and other companies are expected to try to limit the scope of the Digital Markets Act in court. The results could take years but have the potential to set a precedent for future regulations of the tech industry and digital economy.
