Apple, $AAPL, becomes first US tech giant charged under Europe’s new antitrust law — and faces billions in fine
European Union regulators have accused Apple of violating new digital competition rules by preventing app developers from directing consumers to cheaper services.
The European Commission's preliminary findings come from an investigation that began in March. If Apple is found guilty, it could face a fine of up to 10% of its $383 billion annual global revenue, the EU's executive arm stated on Monday. This fine could increase to 20% if the company repeats the offense.
This is the first time the Commission has accused a company of breaching its landmark Digital Markets Act (DMA), which took effect in March. The DMA is a comprehensive set of competition rules designed to limit the power of Big Tech.
The Commission announced in March that it had launched investigations into Apple, Google parent Alphabet, and Facebook parent Meta for allegedly not complying with the DMA. These companies have been designated as "gatekeepers" by the Commission, meaning they are crucial to interactions between businesses and consumers through their links to core platform services like digital marketplaces and app stores.
The Commission must make a final decision on whether Apple has failed to comply with the DMA within one year of opening its investigation on March 25.
Apple stated on Monday that it had made several 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," Apple said.
The Commission's provisional findings indicate that Apple's app store rules prevent developers from providing pricing information within the app or communicating with customers to steer them toward offers on alternative platforms. Apple allows developers to direct customers to a web page through links in their apps, but this process is subject to several restrictions, the Commission said.
Margrethe Vestager, the EU's competition and digital chief, said in Monday's statement that "steering is key to ensure that app developers are less dependent on gatekeepers' app stores and for consumers to be aware of better offers."
Apple responded that all developers doing business in the EU on the App Store have the opportunity to direct app users to the web to complete purchases at a competitive rate. The company stated it would continue to listen and engage with the European Commission.
Additionally, the Commission announced a new investigation into whether Apple's new contractual requirements for app developers breach the DMA. These requirements include a "core technology fee," charging developers of third-party apps €0.50 ($0.54) each time their app is installed.