Europe is looking at Apple as their next target to extort funds from. A company like Apple can hand over billions to the EU without blinking an eye.
A few months after initiating a non-compliance case against Apple under the Digital Markets Act (DMA), the European Commission has shared its preliminary findings, indicating that current App Store rules violate the DMA. These confirmed violations could result in fines up to 10% of Apple’s global annual turnover.
Thierry Breton, the EU’s internal market commissioner, emphasized the need for Apple to change its practices. “Act different” ought to be their new catchphrase, he said. Apple has been driving away creative businesses for far too long, depriving customers of fresh options and chances.
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The tech giant took umbrage at regulations that would require interoperability with rival platforms. #RedTape #Apple #appstore #technologies #regulation #interoperability #appleai #DSA #GDPR #Commissionhttps://t.co/CK9n2f57e1
— The European Conservative (@EuroConOfficial) June 24, 2024
The European Commission argues that third-party developers should be able to inform customers about alternative purchasing options without incurring any charges. Currently, developers on the App Store are prohibited from advertising different prices or alternative distribution channels within their apps. Although Apple now allows developers to include a link to their site, the Commission believes the link-out mechanism is too restrictive.
Developers must disclose transactions to Apple and pay commissions even when they reroute consumers to their websites to complete transactions.Apple only waives a 3% payment processing fee for web purchases.
In response, Apple said that it had changed a number of things in order to comply with the DMA in response to input from the European Commission and developers.. Apple expressed confidence that its plan adheres to the law, estimating that over 99% of developers would pay the same or less in fees under the new business terms.
⚡EU Commission: Apple faces billions fine in EU antitrust proceedings.
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Additionally, the European Commission is opening a third non-compliance 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. European developers have the option to remain on standard business terms or opt for new terms that allow them to distribute apps outside the App Store, albeit with a €0.50 fee per installed app after one million downloads.
Apple has already adjusted the CTF to exclude free non-commercial apps and introduced a three-year transition period for small developers who hit one million downloads for the first time. However, these changes do not significantly impact the long-term. The new investigation will determine if the CTF complies with the DMA.
Installing third-party app stores in the EU, such as AltStore, Setapp Mobile, or Aptoide, currently requires navigating several steps. Users encounter errors in their web browser, must accept app installations in the Settings app, return to the browser, re-download the alternative store, and accept popups about risks. The Commission will examine this “multi-step user journey” for compliance with DMA rules.
🇪🇺 EU Regulators Find Apple Violated New Digital Markets Act
➡️ The European Commission claims Apple illegally blocked developers from telling customers how to access content outside the App Store.
➡️ A separate investigation has been opened into Apple’s “core technology fee”… pic.twitter.com/4eJdw2J0jN
— Agustin Lorenzo (@nitsugalorenzo) June 24, 2024
Margrethe Vestager, the Commission EVP responsible for competition policy, expressed concerns that Apple’s new business model may discourage app developers and users from utilizing opportunities provided by the DMA. She stated, “The letter of the DMA is clear: Gatekeepers have to allow for alternative app stores to establish themselves on their platform, and for consumers to be fully informed about the offers available to them so that they can freely choose where they want to source their apps, and at what conditions.”
With today’s preliminary findings, Apple now has the opportunity to respond to the European Commission in writing. The final decision is expected one year after the formal investigation begins, during which Apple can negotiate with the EU and adjust its business terms to avoid substantial fines.
Key Points:
i. The European Commission’s preliminary findings indicate that Apple’s current App Store rules violate the Digital Markets Act (DMA), potentially leading to fines up to 10% of Apple’s global annual turnover.
ii. The Commission believes third-party developers should be able to inform customers about alternative purchasing options without restrictions or additional charges.
iii. Apple has made changes to comply with the DMA but still requires developers to report transactions and pay commissions for web purchases.
iv. A new investigation will focus on Apple’s Core Technology Fee (CTF) and the multi-step process required to install third-party app stores, assessing compliance with the DMA.
v. Apple can respond to these findings, with the final decision due a year after the investigation’s start, allowing for potential negotiations and business term adjustments to avoid fines.
Lap Fu Ip – Reprinted with permission of Whatfinger News
