Apple is imposing unfair restrictions on app developers for its App Store, in violation of a new European Union law aimed at encouraging competition in the technology industry, regulators in Brussels said Monday.
Apple is the first company accused of violating the Digital Markets Act, a law passed in 2022 that gives European regulators broad authority to force the biggest “online gatekeepers” to change their business practices.
The charges indicate that the European Union, already known as an aggressive regulator of the tech industry, plans to intensify its crackdown. amazon, Google and Meta also face investigations under the new competition rules, while TikTok and x face investigations under another law aimed at forcing internet companies to more aggressively monitor their platforms for illicit content.
EU rules threaten to fragment the global technology market as companies delay the launch of certain products and services due to regulatory concerns. Last week, Apple said it would not release a software update for iPhone users in the European Union that included new artificial intelligence features due to “regulatory uncertainty.” Meta didn't launch Threads, its twitter-like service, on the block until five months after it became available in the United States for similar reasons.
The charges filed Monday further escalated the dispute between Apple, which says its products are designed in the best interests of customers, and EU regulators, who say the company is unfairly using its size and considerable resources to stifle competition.
After launching 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 limit how companies communicate with customers about sales and other offers and content available outside of the App Store. The company faces a fine of up to 10 percent of global revenue, a fine that could reach up to 20 percent for repeat offenses, regulators said. Apple reported $383 billion in revenue last year.
“Today is a very important day for the effective implementation of the WFD,” said Margrethe Vestager, executive vice president of the European Commission in charge of competition policy. She said Apple's App Store policies make developers more dependent on the company and prevent consumers from learning about better deals.
EU regulators said the charges were preliminary and gave Apple a chance to respond. The final decision will be announced next March.
Apple defended its practices, saying its rules and fees were a fair deal by providing such a large platform to reach consumers. Developers could also direct consumers to websites to make purchases outside of the App Store, the company said.
“Over the past few 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.”
Tommaso Valletti, a former European Commission chief economist on cases involving the tech industry, said regulators were “trying to create a reputation for being tough” but faced a challenge when it came to forcing companies like Apple to change their policies. business practices. They could be headed toward a legal fight that could take years to conclude, but could set a precedent for future regulation of the technology industry and the digital economy.
“The European Commission would like Apple to open its ecosystem, and Apple says no,” said Valletti, now a professor of economics at Imperial College London. “Apple is basically saying 'see you in court.'”
Apple's regulatory problems show how government scrutiny of the tech industry is growing around the world. In the United States, Apple is being sued by the Department of Justice for claiming it has an illegal monopoly in the smartphone market. It is also arguing in a US federal court that it has the right to keep up to 27 percent of certain app sales through third-party payment systems, which developers say violates a 2021 court ruling. .
Japan and Britain, which is no longer part of the European Union, have also advanced rules to curb Apple's control over the App Store.
The European Union has long been at the center of regulatory efforts to clamp down on the world's largest tech companies, but the Digital Markets Act gives officials new powers to intervene without the lengthy process of filing antitrust lawsuits. traditional, which can take years. solve.
Another new law, called the Digital Services Act, gives regulators more power to regulate social media platforms and illicit online content, including material harmful to children. Meta, TikTok and x are under investigation for possible violations.
In January, Apple Announced 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 also reduced the service fees it charges businesses for sales through the App Store to 17 percent, from 30 percent.
Apple has made other changes that have upset developers, including charging a “basic technology fee” of 50 euro cents for each download of its app after it has been downloaded a million or more times in 12 months. Spotify and Epic Games, the maker of Fortnite, were among the companies that 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 fee, saying it may “not ensure effective compliance with Apple's obligations under the DMA.”
