Apple Faces EU Scrutiny as First Target of New Digital Competition Rules

The European Union (EU) is flexing its muscles against Big Tech, with Apple becoming the first company in the firing line under the bloc’s new Digital Markets Act (DMA). The DMA, implemented in March 2024, aims to curb the dominance of major tech companies by preventing them from stifling competition in digital markets.

The EU accuses Apple’s App Store practices of violating the DMA by restricting app developers from informing users about cheaper purchasing options outside the App Store. This includes preventing developers from directing users to their own websites or alternative app stores for subscriptions or in-app purchases.

This move by the EU comes amidst a growing chorus of criticism against Apple’s control over its App Store ecosystem. App developers like Spotify have long complained about Apple’s hefty commission fees, which can reach up to 30% of in-app purchases. This not only eats into developer profits but can also lead to artificially high prices for consumers.

The DMA mandates that app developers be allowed to freely inform users about alternative purchasing options, potentially leading to a more open and competitive app market.

The stakes are high for Apple. The company could face hefty fines of up to 10% of its global revenue, translating to billions of euros, or even daily penalties for non-compliance. The EU is also simultaneously investigating a “core technology fee” of 50 euro cents that Apple is charging developers for each app downloaded outside the App Store. Rivals fear this fee will discourage developers, particularly those offering free apps, from exploring alternative app stores.

Apple, however, maintains its innocence. The company insists it has made changes to comply with the DMA and estimates that most developers will see no change or even a reduction in fees under their new business model. Apple also highlights the ability for developers to direct users to web versions of their apps for purchases outside the App Store.

This clash between the EU and Apple is just the beginning of a potential tech-lash in Europe. The commission is also investigating Google, Meta, and whether Apple is making it difficult for users to change their default web browsers on iPhones.

The outcome of this case will be closely watched by regulators and tech companies worldwide. A strong stance by the EU could set a precedent and encourage other countries to implement similar regulations, potentially leading to a more level playing field in the digital marketplace.

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