Brussels accuses Apple of breaking EU competition rules

Author: Javier Espinoza Source: Financial Times
June 24, 2024 at 09:33
The move against Apple marks the first time EU regulators have used new digital rules on a big tech group © Gonzalo Fuentes/Reuters
The move against Apple marks the first time EU regulators have used new digital rules on a big tech group © Gonzalo Fuentes/Reuters

Tech giant faces penalty of up to 10% of global annual revenue

Brussels has accused Apple of stifling competition on its App Store, marking the first time EU regulators have used new digital rules on a Big Tech group.

The European Commission has been gearing up for years to unleash the full authority of its new Digital Markets Act against Big Tech. The landmark rules were designed to help start-ups by forcing powerful “online gatekeepers” — most of whom are US companies — to open up their businesses to competition.

Tech groups had to comply with the law starting from March this year.

Regulators in Brussels are concerned about restrictions Apple is imposing on developers’ ability to “freely steer their customers” by directing them to promotions outside the App Store.

Thierry Breton, the EU internal market commissioner, said: “Apple’s new slogan should be ‘act different’. Today we take further steps to ensure Apple complies with the DMA rules.”

If found guilty, the iPhone maker faces a penalty of up to 10 per cent of its global annual revenue, meaning any fine could run into tens of billions of dollars. The fines can rise to 20 per cent in the event the offence is repeated, the EU said. Apple said it was “confident” in its compliance.

Speaking at a conference on the DMA in Amsterdam on Monday, Margrethe Vestager, the EU’s executive vice-president in charge of digital policy, said: “We are dealing with the biggest and most valuable companies on the planet. The DMA is not an excessive ask. [It] is plain vanilla to ask for a fair, open and contestable marketplace.”

She added: “I find that it is surprising that some of the most valuable, respected big companies on this planet do not take compliance as a badge of honour.”

The commission’s preliminary findings have to be finalised within one year from the start of its official investigation in March. The move against Apple was first reported by the Financial Times this month.

The commission, the bloc’s executive arm, also announced on Monday that it was investigating whether Apple’s developer fees breached the EU’s rules.

The fees include a charge of 50 cents per download that companies have to pay if their app is used by more than 1mn people.

As part of the new probe into developer fees, Brussels said it was looking at whether Apple was imposing too many restrictions for users to download and install alternative app stores.

Apple said it had “made a number of changes to comply with the DMA in response to feedback from developers and the European Commission”.

“We are confident our plan complies with the law, and estimate more than 99 per cent of developers would pay the same or less in fees to Apple under the new business terms we created,” the company said.

In January, Apple introduced historic changes to its iOS mobile software, app store and Safari web browser in the EU as part of efforts to appease competition concerns.

On Friday, the tech giant said it was delaying the introduction of artificial intelligence-enabled features on iPhones in the EU because of the uncertainty brought about by new tech rules.

Apple has been under increasing pressure from EU regulators. The company was fined €1.8bn this year for stifling competition from rival music streaming services. Apple is contesting the fine in EU courts.

“If the Commission indeed finds that Apple infringes the letter or the spirit of the DMA, it has to impose fines that really hurt - that is the only language Big Tech understands,” said Markus Ferber, a German MEP.

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