Apple First ‘Gatekeeper’ To Face Charges Under EU’s DMA Regulations

By Brian Bell  |  June 25, 2024 | 12:39pm
Image via Unsplash/Laurenz Heymann
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Apple First ‘Gatekeeper’ To Face Charges Under EU’s DMA Regulations
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The European Union’s new regulations regarding digital markets outlined in the aptly named Digital Markets Act are at the heart of charges filed Monday against Apple over the company’s App Store “steering” policies.

The European Commission stated that Apple’s policies on app developers steering consumers to cheaper or free purchasing alternatives outside of apps downloaded through the App Store violate the DMA. Those policies limit developers’ ability to do so via “link-outs,” a measure won in 2021’s Epic v. Apple ruling, that are still subject to restrictions that limit how those options are communicated and require developers to pay fees on digital purchases made within seven days of users utilize a “link-out” option.

“Our preliminary position is that Apple does not fully allow steering,” said European competition policy head Margrethe Vestager. “Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.”

The charges are the first filed since the European Commission started multiple investigations into major tech companies, which it defines as “gatekeepers,” in March. The organization is currently investigating Google’s parent company Alphabet and Meta on consumer protection grounds. It also counts Amazon, ByteDance and Microsoft among companies the European Commission defines as gatekeepers.

The announcement of the charges also revealed additional ongoing investigations into Apple focused on the company’s Core Technology Fee, the process of installing third-party app stores on Apple devices and developer eligibility requirements put in place by Apple. “Preliminary investigative steps” into Apple’s app validation protocols and the ability to sideload third-party apps and marketplaces are ongoing as well.

“Apple’s new slogan should be ‘act different,’ said Thierry Breton, Commissioner for Internal Market. “We are also opening a new case in relation to Apple’s new business terms for iOS. Without prejudice to Apple’s right of defense, we are determined to use the clear and effective DMA toolbox to finally open real opportunities for innovators and for consumers.”

Apple now has nine months to respond before the European Commission issues a final decision in March 2025. The company faces fines of up to 10% of its global revenue, roughly $38 billion, if found to be non-compliant.

The iPhone makers previously stated it had made changes to comply with the new European regulations and maintained that confidence in response to the charges.

“We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created,” Apple told the Associated Press in a statement. “All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate.”

Apple also faces legal challenges in the U.S. centered on accusations that it holds a monopoly on smartphones that stifles competition and innovation. That lawsuit, filed by the U.S. Department of Justice, remains ongoing.

 
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