Apple is imposing unfair restrictions on developers of applications for its App Store, violating a new European Union law aimed at encouraging competition in the technology industry, regulators in Brussels said Monday.
Apple is the first company to be accused of violating the Digital Markets Act, a law passed in 2022 that gives European regulators broad powers to force the largest “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 step up its crackdown. Amazon, Google and Meta are also being investigated under the new competition rules, while TikTok and
The EU rules threaten to fragment the global tech market as companies delay the release of certain products and services over regulatory concerns. Last week, Apple said it would not release a software update for iPhone users in the European Union with new artificial intelligence features due to “regulatory uncertainty.” Meta released Threads, its Twitter-like service, five months after it became available in the United States for similar reasons.
The charges filed Monday further escalated the conflict between Apple, which claims its products are designed in the interests of consumers, and EU regulators. They believe the company is unfairly abusing its size and significant resources to stifle competition.
After launching an investigation in March, EU regulators said Apple imposed unlawful restrictions on companies that make games, music services and other applications. Under the law, known as the DMA, Apple can’t restrict how companies communicate with customers about sales and other offers and content available outside the App Store. The company faces a fine of up to 10 percent of global revenue, a fine that could rise to 20 percent for repeat violations, regulators said. Apple reported $383 billion gain last year.
“Today is a very important day for the effective enforcement of the DMA,” said Margrethe Vestager, Executive Vice-President of the European Commission responsible for competition policy. She said Apple’s App Store policies make developers more dependent on the company and prevent consumers from knowing about better offers.
EU regulators said the charges were preliminary and gave Apple a chance to respond. A final decision will be announced in March next year.
Apple defended its practices, saying its rules and fees were a fair tradeoff for offering such a large platform to reach consumers. Developers could also direct consumers to websites to make purchases outside the App Store, the company said.
“In recent 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 top economist for the European Commission on tech industry matters, said regulators had “tried to build a reputation for being tough” but faced a challenge when it came to forcing companies like Apple to change their business practices. They could be heading for a legal battle that could last years but set a precedent for future regulation of the tech industry and digital economy.
“The European Commission wants Apple to open up its ecosystem, and Apple says no,” said Valletti, now a professor of economics at Imperial College London. “Apple is essentially saying, ‘See you in court.’”
Apple’s regulatory issues highlight how government scrutiny of the technology industry is increasing worldwide. In the United States, Apple is being sued by the Justice Department over claims that it has an illegal monopoly in the smartphone market. It is also arguing in US federal court that it has the right to take 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 introduced stricter rules to limit Apple’s control over the App Store.
The European Union has long been at the center of regulatory efforts to control the world’s largest tech companies, but the Digital Markets Act gives officials new powers to intervene without the lengthy process of filing traditional antitrust lawsuits, which can take years. dissolve.
Another new law, called the Digital Services Act, gives regulators more power to govern social media platforms and illegal 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 App Store policies in an effort to comply with the Digital Markets Act, including allowing users to download competing app stores for the first time. Apple also lowered the service fee it charges businesses for sales through the App Store from 30 percent to 17 percent.
Apple has made other changes that have angered developers, including charging a “core technology fee” of 50 cents for every download of its app after it has been downloaded a million times or more within 12 months. Spotify and Epic Games, the maker of Fortnite, were among the companies that said the changes amounted to a new anti-competition tax and called on regulators to intervene.
The European Commission has said it has launched a separate investigation into Apple’s technology fee because it may “fail to effectively comply with Apple’s obligations under the DMA”
