EU charges Apple with breaking tech competition rules, threatens hefty fine
The European Union on Monday accused Apple of violating its Digital Markets Act (DMA), making the tech giant the first charged under the landmark legislation that could result in a steep fine for the company.
The EU's technology and competition regulator, the European Commission, announced that preliminary findings into an investigation it launched against Apple in March found the company's App Store violates the DMA because it allegedly does not allow app developers to "freely steer" customers to offerings outside the App Store.
The commission said it had also launched another investigation into whether Apple's new contractual requirements for third-party app developers violate the DMA.
At issue is the core technology fee, the multi-step user journey to download and install alternative app stores on iPhones and the eligibility requirements for developers to offer alternative app stores or directly distribute apps from the web on iPhones.
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Apple rolled out the new fees in March in the EU, which include the core technology fee for major app developers even if they do not use any of its payment services, prompting criticism from "Fortnite" creator Epic Games and others.
"Apple's new slogan should be 'act different.' Today we take further steps to ensure Apple complies with the DMA rules," Thierry Breton, commissioner for the internal market, said in a statement. "We have reason to believe that the AppStore rules not allowing app developers to communicate freely with their own users is in breach of the DMA. We are also opening a new case in relation to Apple's new business terms for iOS."
Apple will have time to adjust its business dealings under the DMA, given the commission has until March of next year to issue a final decision, though the company is "confident" its current approach complies.
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"Throughout the past several months, Apple has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission," an Apple spokesperson said in a statement to FOX Business. "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."
If found guilty of violating the DMA, Apple faces a fine of up to 10% of its annual global turnover, which could run in the tens of millions of dollars.
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The DMA is aimed at promoting competition in the digital economy by leveling the playing field for smaller rivals to take on Big Tech firms. Weeks after it went into effect on March 7, the EU announced antitrust investigations into Apple, Google parent Alphabet and Facebook parent Meta.
Earlier this year, the EU hit Apple with a nearly $2 billion antitrust fine after finding that the company banned music streaming app developers from fully informing iOS users about alternate and cheaper music subscription services. Apple is challenging the fine.
FOX Business' Kelly O'Grady, Eric Revell and Reuters contributed to this report.