The EU has today announced that it is not satisfied that Apple’s App Store changes comply with the Digital Markets Act (DMA), and the company is now officially under investigation for non-compliance.
If that investigation confirms that Apple failed to comply with the antitrust law, then the iPhone maker could be fined up to 10% of its worldwide turnover – increasing to 20% for repeat infringements …
The story so far
The DMA requires tech giants to ensure that they are not using a dominant market position to give their own products and services an unfair advantage over competing ones.
The first step in the process was to decide which companies qualified as “gatekeepers” under the law – that is, companies whose power was enough to effectively harm competitors. Apple was found to be a gatekeeper in terms of the App Store, as there was no other way for a developer to sell iPhone apps. That meant the company was obliged to make policy changes to comply with the DMA.
Apple announced that it would allow third-party app stores, but with a mass of asterisks. These included charging a Core Technology Fee for any app sold outside of its own App Store, which could potentially bankrupt small developers.
We said at the time that these proposals were not going to satisfy the EU.
Apple has bought itself some time here for sure – in part, because what it has come up with is so complicated it will take regulators some time to digest all the details and run all the numbers.
But there seems little doubt that Apple is aiming to do everything it can to make leaving the App Store as difficult and expensive as possible.
Once all the dust has settled, it seems pretty clear that regulators are not going to consider what Apple has done as DMA compliant.
App Store changes investigated for non-compliance
As we predicted, the EU has today announced that it is not satisfied with the changes Apple has made, and the company is now subject to a non-compliance investigation. Google and Meta are also under investigation for their own responses to the DMA.
Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s “pay or consent model”.
The Commission suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA.
In addition, the Commission has launched investigatory steps relating to Apple’s new fee structure for alternative app stores […] Apple’s new fee structure and other terms and conditions for alternative app stores and distribution of apps from the web (sideloading) may be defeating the purpose of its obligations under Article 6(4) of the DMA.
Safari choice screen also under investigation
Another DMA requirement was for Apple to ensure that iPhone users had a free choice of web browser. The company announced that it would make this possible with a new option screen during iPhone setup.
This has now been implemented, and seems to be having at least some small effect. However, the EU is not satisfied with the specifics of this – which may simply be down to the wording used. This one is likely to be easily resolved.
Maximum fine is 10% of 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 the DMA.
In case of an infringement, the Commission can impose fines up to 10% of the company’s total worldwide turnover. Such fines can go up to 20% in case of repeated infringement.
Apple’s 2023 turnover was $383B, which could mean fines of up to $38 billion initially, rising to $76 billion.
Investigation aims to complete in less than a year
Such investigations take time, but in this case the stated goal is to complete it in less than a year – which is lightning speed by the usual standard.
That won’t be the end of matters, however. If the EU does find Apple non-compliant, the Cupertino company will appeal the ruling, and we will then be set for literally years of court battles as the case works its way up the court hierarchy.
Photo by Pixabay
FTC: We use income earning auto affiliate links. More.
