The EU announced today that it is not satisfied that Apple’s changes to the App Store comply with the Digital Markets Act (DMA), and the company is now officially under investigation for non-compliance.
If that investigation confirms that Apple did not comply with antitrust law, then the iPhone maker could be fined up to 10% of its worldwide turnover – rising to 20% for repeat violations…
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The DMA requires technology giants to ensure that they do not use a dominant market position to give their products and services an unfair advantage over their competitors.
The first step in the process was to decide which companies qualified as “gatekeepers” under the law—that is, companies whose power was sufficient to effectively harm competition. Apple was found to be the gatekeeper in terms of the App Store, as there was no other way for a developer to sell iPhone apps. This meant that the company was obliged to change the policy to comply with the DMA.
Apple has announced that it will allow third-party app stores, but with a ton of stars. This included charging an underlying technology fee for any app sold outside of its own App Store, potentially bankrupting small developers.
We said then that these proposals would not satisfy the EU.
Apple must have bought itself some time here – in part because what it came up with is so complicated that it will take some time for regulators to digest all the details and run all the numbers.
But there’s no doubt that Apple intends to do everything it can to make leaving the App Store as difficult and expensive as possible.
After all the dust settles, it seems pretty clear that the regulators did not I will consider what Apple has done to be DMA compatible.
App Store changes investigated for non-compliance
As we predicted, the EU announced today that it is not happy with the changes made by Apple, and the company is now the subject of a non-compliance investigation. Google and Meta are also under investigation for their own responses to the DMA.
The commission today opened investigations into non-compliance under the Digital Markets Act (DMA) in Alphabet’s Google Play governance rules and self-preference on Google Search, Apple’s App Store governance rules and Safari and Meta’s “payment or consent model” choice screen.
The Commission suspects that the measures introduced by these gatekeepers do not meet the effective obligations under the DMA.
In addition, the Commission initiated investigative steps regarding Apple’s new fee structure for alternative app stores […] Apple’s new fee structure and other terms and conditions for alternative app stores and web app distribution (sideloading) may defeat the purpose of its obligations under Article 6(4) DMA.
Safari’s selection screen is also under investigation
Another DMA request was for Apple to ensure that iPhone users have a free choice of web browser. The company has announced that it will enable this with a new display option during iPhone setup.
This has now been implemented and seems to be having at least some effect. However, the EU is not happy with the specifics of this – which simply boils down to the wording used. This one will probably be easy to solve.
The maximum penalty is 10% of the total worldwide turnover
The maximum fines allowed under many laws are trivial for a company of Apple’s size – but this is not the case with DMA.
In the event of a violation, the Commission can impose fines of up to 10% of the company’s total worldwide turnover. Such fines can go up to 20% in case of repeated violation.
Apple’s 2023 revenue was $383 billion, which could mean fines of up to $38 billion initially, rising to $76 billion.
The investigation is expected to be completed in less than a year
Such investigations take time, but in this case the stated goal is to complete them in less than a year – lightning fast by normal standards.
However, that will not be the end of the matter. If the EU does indeed find that Apple is not in compliance, the Cupertino company will appeal the ruling, and then we’ll be in for literally years of court battles as the case moves up the court hierarchy.
Photo by Pixabay
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