EU Accuses Apple of Breaking New Tech Rules, Threatening Huge Fine

European Union regulators have taken a significant step in their ongoing battle with Big Tech, accusing Apple of violating tough new digital competition regulations. The European Commission’s preliminary findings, announced on Monday, suggest that Apple may have breached the Digital Markets Act (DMA) by restricting app developers from directing consumers to cheaper services.

If found guilty, Apple could face a fine of up to 10% of its annual global revenue, equivalent to its $383 billion earnings. Additionally, if the offence is repeated, the fine could be doubled to 20% of the company’s global revenue, according to the EU’s executive arm.

This marks the first instance of the Commission accusing a company of violating the DMA, which was enacted in March as a comprehensive set of competition rules aimed at curbing the dominance of major tech firms like Apple, Google parent Alphabet, and Meta, formerly known as Facebook.

Apple, along with Google and Meta, has been designated as a “gatekeeper” under the DMA due to its significant influence over digital marketplaces and app stores. The Commission initiated investigations into these companies in March, suspecting non-compliance with the new regulations.

The crux of the accusation against Apple revolves around its restrictions on app developers within its app store. The Commission alleges that developers are unable to provide pricing information or communicate directly with customers to promote alternative offers. While Apple allows developers to include links in their apps redirecting users to external web pages, this “link-out process” is subject to various limitations, the Commission claims.

Margrethe Vestager, the EU’s competition and digital chief, emphasized the importance of addressing these issues, stating, “Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.”

In response to the accusations, Apple asserted that it has made adjustments to comply with the DMA based on feedback from developers and the European Commission. The company maintains that its measures provide developers with options to direct users to external web pages for purchases at competitive rates.

The Commission’s investigation into Apple’s alleged violations comes shortly after it fined the tech giant €1.84 billion in March for obstructing rival music streaming services from informing iPhone users about cheaper subscription options outside of Apple’s app store. Apple has indicated its intention to appeal the fine.

Amid escalating regulatory scrutiny, Apple announced changes to its operations in the EU earlier this year, including plans to permit third-party app stores on iPhones and iPads and substantial reductions in its app store fees. These moves reflect the company’s efforts to navigate the evolving regulatory landscape and maintain compliance with EU regulations.