European Union regulators accused Apple on Monday of breaking new rules on digital competition by imposing rules in its App Store marketplace that prevent app makers from pointing users to cheaper options on other venues.
The European Commission said that according to the preliminary findings of its investigation, the iPhone maker had breached the 27-nation bloc’s Digital Markets Act.
The rulebook, which is also known as the DMA and took effect in March, is a sweeping set of regulations aimed at preventing tech “gatekeepers” from cornering digital markets.
Under the provisions, app developers must be allowed to inform customers of cheaper purchasing options and direct them to those offers.
The commission, the bloc’s executive arm, said Apple’s App Store rules “prevent app developers from freely steering consumers to alternative channels for offers and content.”
Apple now has a chance to respond to the findings, which the commission will assess. It must make a final decision on Apple’s compliance by March 2025. The company could face fines worth up to 10% of its global revenue, which could amount to billions of euros, or daily penalties.
The commission also kept up the pressure on Apple, simultaneously opening a new investigation into the company’s compliance with the DMA looking at new contractual terms that Apple has offered app developers.
Regulators zeroed in on a “core technology fee” of 50 euro cents (54 cents) that Apple is now charging developers for each time their apps are downloaded and installed from outside Apple’s App Store. The DMA’s provisions open the way for alternative app stores to give consumers more choice. Rivals had criticized the fee, saying it would deter many existing free apps, which don’t pay any fees, from jumping ship.
Apple Inc. said over the past several months, it “has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission.”
“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,” the company said in a statement. “All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate.”
The company said it will “continue to listen and engage” with the commission.