European Commission Finds Apple App Store Rules in Breach of Digital Markets Act

Sydney Times

— 2 min read
European Commission Finds Apple App Store Rules in Breach of Digital Markets Act

Introduction

A non-compliance case was opened on Apple by the European Commission regarding the Digital Markets Act (DMA). The preliminary findings suggest that Apple's current App Store rules are in breach of the DMA, which could lead to fines of up to 10% of their global annual turnover.

Background

  • The European Commission believes that third-party developers should be able to inform customers of alternative purchasing possibilities free of charge.
  • Developers on the App Store are restricted from advertising different prices or alternative distribution channels within their apps.
  • While Apple allows developers to include a link to their websites, the European Commission believes there are still too many restrictions with this mechanism.

Apple's Response

  • Apple has made changes to comply with the DMA based on feedback from developers and the European Commission.
  • The company claims that their new business terms would result in over 99% of developers paying the same or less in fees to Apple.

Third Non-Compliance Investigation

  • The European Commission is opening a third investigation into Apple's new contractual terms for EU developers.
  • This investigation will focus on Apple's Core Technology Fee (CTF) and alternative app marketplaces.

Core Technology Fee

  • European developers can choose new business terms that allow them to distribute their apps outside of the App Store.
  • However, these terms include a fee of €0.50 per installed app after one million downloads.
  • The CTF has been adjusted to exempt free non-commercial apps and provide a transition period for small developers with hit apps.

User Experience with Alternative App Stores

  • Installing third-party app stores in the EU can be a multi-step process, involving various permissions and warnings.
  • The European Commission will examine this user journey and its compliance with DMA rules.

Concerns from the European Commission

  • Margrethe Vestager, the Commission EVP, expressed concerns that Apple's new business model may discourage app developers and end users from utilizing alternative app stores.
  • Gatekeepers like Apple are required to allow for the establishment of alternative app stores on their platform, as per the DMA.

Conclusion

Apple can now respond to the European Commission's preliminary findings in writing. The final decision is expected one year after the formal investigation's opening. Apple has the opportunity to negotiate with the EU and adjust its business terms to avoid potential fines.

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