The European Commission has found that iPhone maker Apple has violated new laws designed to protect smaller competitors from big tech platforms.
Apple was found in breach of sweeping EU regulations aimed at enabling smaller companies to compete and allowing consumers to find cheaper and alternative apps in the tech company’s app store.
The European Commission, which serves as the EU’s antitrust and technology regulator, stated it had sent preliminary findings to Apple following an investigation launched in March.
“For too long Apple has been squeezing out innovative companies — denying consumers new opportunities and choices,” stated Thierry Breton, the European commissioner responsible for digital markets, on X.
In preliminary findings, which Apple can appeal, the European Commission expressed that Apple’s practices did not comply with the Digital Markets Act (DMA) “as they prevent app developers from freely steering consumers to alternative channels for offers and content”.
Apple has 12 months to comply before facing fines of up to 10% of its global revenues, but the EU hopes ongoing dialogue will lead to compliance rather than sanctions.
Additionally, the commission has initiated a new non-compliance procedure against Apple due to concerns that its new contract terms for third-party app developers also fall short of the DMA’s requirements.
This marks the third non-compliance investigation opened by the commission into Apple since the DMA came into force last year and the sixth overall, with two other inquiries ongoing into Google and one into Meta, the owner of Facebook.
Central to Monday’s findings are three aspects of Apple’s practices, including fees charged to app developers for every purchase made within seven days of linking out to the commercial app.
The commission asserts that while a fee for such matchmaking is justifiable, Apple’s charges go “beyond what is strictly necessary”.
In its preliminary findings from an earlier investigation, the EU reiterated that the new digital laws require Apple to ensure that developers can “free of charge, inform their customers of alternative cheaper purchasing possibilities, steer them to those offers, and allow them to make purchases”.
As part of the new investigation, the commission is examining a 0.50c charge, or “core technology fee”, that Apple demands each time a developer’s app is installed on a phone.
These allegations against Apple are the first against a tech company under the DMA, landmark legislation introduced last August to ensure six designated “very large online platforms” including Google, Amazon, Meta, and ByteDance (TikTok) compete fairly.
The commission also found that Apple made it difficult for customers to find pricing information, requiring them to “link out” to a webpage where contract details could then be found.
“If the commission’s preliminary views were to be ultimately confirmed, none of Apple’s three sets of business terms would comply with article 5(4) of the DMA, which requires gatekeepers to allow app developers to steer consumers to offers outside the gatekeepers’ app stores, free of charge,” the Commission said.
The EU likened Monday’s preliminary findings to the halfway stage in a formal antitrust investigation during which a company is shown a statement of objection and given time to rectify its anti-competitive practices.
Apple stated it had made numerous changes to comply with the DMA in recent months in response to feedback from developers and European Commission investigators.
“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 said.
“All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate. As we have done routinely, we will continue to listen and engage with the European Commission.”
