Apple will be the first Big Tech to face charges under EU digital law

Brussels will announce that the iPhone maker is not complying with new rules designed to open its app store to competition.

Brussels is poised to accuse Apple of allegedly stifling competition in its mobile app store, the first time EU regulators have used new digital rules to target a Big Tech group.

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

The charges would be the first brought against a technology company under the Digital Markets Act (DMA), landmark legislation designed to force powerful “online gatekeepers” to open 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 about the charges against Apple was expected in the coming weeks, two people with knowledge of the case said.

These people said regulators made only preliminary findings, and Apple could still take steps to correct its practices, which could lead regulators to reevaluate any final decision. They added that the timing of any announcement could also change.

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

If found to be violating the DMA, Apple faces daily non-compliance fines of up to 5% of its average daily worldwide revenue, which is currently just over $1 billion.

The move comes as competition regulators around the world increase oversight of Big Tech companies and their market dominance. In March, the US opened an antitrust case against Apple for allegedly using its power in the smartphone sector to crush rivals and limit consumer choice.

Epic Games, which sued Apple over the App Store in 2020, is also awaiting a ruling from a California federal judge on whether Apple failed to comply with a US injunction banning its targeting rules, following a series of court hearings in recent years. weeks.

In January, Apple announced historic changes to its iOS mobile software, the App Store and the Safari browser in the EU.

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

However, the EU is also analyzing whether these fee changes adequately adhere to its new digital rules. Apple has introduced new charges in Europe, including a 50-cent “basic technology fee” for developers with apps that have more than 1 million users for every first install by a user. Apple will also charge an additional 3% fee to app developers who use its payment processor.

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

According to analysis from Sensor Tower, consumer spending on Apple’s App Store during the second quarter of 2024 was “relatively stable,” suggesting that EU rules have not yet affected the company’s bottom line.

Apple declined to comment, but pointed to an earlier statement that said: “We are confident that our plan complies with the DMA and will continue to engage constructively with the European Commission as they conduct their investigations.”

The EU declined to comment.

Via Financial Times.