Apple’s App Store terms break EU tech rules, EU regulators say: Billions in fines possible

The EU’s tech rules are outlined in the new Digital Markets Act (DMA).

This opens a new front in the increasingly bitter fight between the US tech giant and Brussels over the EU’s DMA.

Also Read | Hey Siri! Help me get Apple out of an AI-shaped hole

What is the issue about?

The EU executive said it was opening an investigation into the iPhone maker over its new contractual requirements for third-party app developers and app stores, according to the report.

It pointed out three of Apple’s business terms.

“None of these business terms allow developers to freely steer their customers,” the EU watchdog said. “For example, developers cannot provide pricing information within the app or communicate in any other way with their customers to promote offers available on alternative distribution channels.”

The European Commission, which also acts as the EU antitrust and technology regulator, said it had already sent its findings to Apple following an investigation launched in March, according to the report.

Also Read | Meta and Google, like OpenAI and Apple, persuade new users as AI space evolves

The background

On Friday, Apple said it would delay rolling out recently announced AI features in Europe because of “regulatory uncertainties” linked to the DMA.

DMA rules mean Apple must allow developers distributing apps via the App Store to be able to inform users, free of charge, of “alternative cheaper purchasing possibilities, steer them to those offers and allow them to make purchases”, the commission said.

The DMA seeks to force the world’s biggest tech firms, including Apple to open up to competition in the 27-country EU.

This is the first time the commission has levelled a formal accusation against a tech firm under the new rules, after opening the first DMA probes into Apple, Google and Meta in March, AFP wrote.

What does it mean for Apple?

If the commission’s view is confirmed, it would adopt a “non-compliance decision” by late March 2025, imposing billions in fines to Apple.

Under the new law, the commission has the power to impose fines of up to 10% of a company’s total global revenue, and this can rise to up to 20% for repeat offenders.

Apple’s total revenue in the year to September 2023 stood at $383 billion ( ₹31.99 lakh crore).

The EU also has the right to break up companies, but only as a last resort.

The commission in March hit Apple with a 1.8-billion-euro ($1.9 billion) fine after reaching similar conclusions in a probe launched in 2020 following a complaint from Swedish music streaming giant Spotify.

Apple is also under investigation over whether it allows users to easily uninstall apps on its iOS operating system, and the design of the web browser choice screen.

Who else are at risk?

Apple is not the only tech titan in the EU’s sights.

Google’s parent Alphabet, Amazon, Meta, Microsoft and TikTok’s owner ByteDance must also comply with the DMA. Online travel giant Booking.com will also need to, later this year.

Also Read | Apple plans to integrate AI tech from various companies, Meta also in talk