Mike RamosApple latest updates EU’s New Digital Competition Rules Aimed at Big Tech Now Target Apple as Their First Target
Regulators in the European Union have accused apple latest updates of violating new regulations on digital competition by placing restrictions on its App Store marketplace that prohibit app developers from directing customers to less expensive options on other platforms.
On December 16, 2020, the Apple logo is illuminated at a store in Munich, Germany’s city centre. Regulators in the European Union have charged Apple with violating new regulations pertaining to digital competition by prohibiting app developers on its App Store from directing users to alternative locations. (AP Image/File: Matthias Schrader)
LONDON (AP) — Under the new digital competition regulations of the European Union, European regulators charged Apple on Monday for allegedly obstructing app developers from directing customers to less expensive alternatives available outside of the App Store.
The European Commission stated that the limitations the iPhone manufacturer places on developers using its mobile App Store have violated the Digital Markets Act of the 27-nation bloc, based on the preliminary results of its investigation.
Under threat of severe financial penalties, the rulebook, also known as the DMA, is a comprehensive set of regulations designed to keep tech “gatekeepers” from cornering digital markets. Following its establishment in March, the commission launched its first round of inquiries. These included cases involving Google and Meta as well as an ongoing investigation into whether Apple is doing enough to make it simple for iPhone users to switch web browsers.
Apple has been under pressure to remove some of the barriers to competition surrounding its profitable iPhone franchise from both sides of the Atlantic.
This year, the U.S. Justice Department launched a broad antitrust lawsuit against Apple, alleging that the company had unlawfully monopolised the smartphone market, boxed out rivals, stifled innovation, and maintained artificially high prices.
Apple had begun to comply with a U.S. court order enabling links to alternative payment systems within iPhone apps by the time that case was filed. However, a judge expressed dissatisfaction with the company’s strategy and suggested that changes might be necessary.
For years, app developers like Spotify have been dissatisfied with Apple’s insistence that subscriptions must be purchased through iOS apps, which allows Apple to keep a 30% commission. Following these complaints, European regulators fined Apple $2 billion for unjustly giving its music streaming service preference over competitors Spotify and others.
App developers must be permitted by the DMA’s provisions to notify customers of and refer them to offers for less expensive purchases.
When that lawsuit was filed, Apple had already begun to abide by an order from a U.S. court permitting links to other payment methods in iPhone apps. However, the judge expressed dissatisfaction with the company’s strategy and suggested that adjustments might be necessary.
App developers, like Spotify, have long been unhappy with Apple’s policy of requiring subscription purchases to be made through iOS apps, which allows Apple to keep up to a 30% commission. The European regulators responded to these complaints by fining Apple $2 billion for unjustly giving its music streaming service preference over competitors like Spotify.
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App developers must be able to notify users of less expensive options for purchases and point users towards those offers in accordance with the DMA’s provisions.
App Store policies “prevent app developers from freely steering consumers to alternative channels for offers and content,” according to the commission, the bloc’s executive arm.
Apple now has an opportunity to comment on the results. By March 2025, the commission must have reached a final decision regarding Apple’s compliance. The business may be subject to daily fines or fines equal to up to 10% of its worldwide revenue, or billions of euros.
Apple recently threatened to withhold a slew of new artificial intelligence features from the European market from iPhones due to regulatory tensions, citing the company’s belief that the new regulations in the region will be too onerous.
However, the European Commission is continuing to put pressure on Apple while also launching a fresh inquiry into the terms of contracts that the company is providing to app developers.
Authorities focused on a “core technology fee” that Apple now charges developers for each time their apps are downloaded and installed from sources other than Apple’s App Store. This fee is 50 euro cents (54 cents). The DMA’s provisions allow for more options for consumers through alternative app stores.
According to the commission, in order to utilise some of the new features made possible by the DMA, you must agree to the new terms. Opponents of the fee claimed it would discourage users of the many free apps already available that don’t charge a fee from switching to their services.
Margrethe Vestager, the European Commissioner for Competition, expressed concern on social media, saying, “We are concerned that Apple’s new business model makes it too hard for app developers to operate as alternative marketplaces & reach their end users on iOS.”According to Apple Inc., it “has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission” during the previous few months.
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The company released a statement saying, “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.” “We have introduced new capabilities that all developers doing business in the EU can use on the App Store. These capabilities include the ability to send app users to the web to complete purchases at a very competitive rate.”
The business promised to “keep listening and engaging” with the commission.
Since 2020, the European Union has been conducting a comparable inquiry to determine if apple most recent update in-app purchase system and associated limitations breached antitrust laws in Brussels. However, “in order to prevent numerous inquiries into the identical behaviour”.
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