Apple could be fined 10% of global turnover
Apple could be fined 10% of global turnover

Today, the EU announced that it is not satisfied that changes to Apple’s App Store comply with the Digital Markets Act (DMA) and the company is now being formally investigated for non-compliance.

If this investigation confirms that Apple has failed to comply with antitrust law, then the iPhone maker could be fined up to 10% of its worldwide turnover – rising to 20% for repeat violations…

The story so far

The DMA requires technology giants to ensure they do not use a dominant market position to give their own products and services an unfair advantage over competitors.

The first step in the process was to decide which companies qualified as “gatekeepers” under the law – ie. companies whose power is sufficient to effectively harm competitors. Apple was found to be a gatekeeper regarding the App Store as there was no other way for the developer to sell iPhone apps. This meant that the company was required to make policy changes to comply with the DMA.

Apple has announced that it will allow third-party app stores, but with a bunch of asterisks. These include charging a core technology fee for any app sold outside of its own App Store, potentially bankrupting small developers.

We said then that these proposals would not satisfy the EU.

Apple has bought itself some time here for sure – in part because what it has come up with is so complex that it will take some time for regulators to digest all the details and do all the numbers.

But there seems little doubt that Apple is committed to doing everything it can to make leaving the App Store as difficult and expensive as possible.

After all the dust has settled, it seems pretty clear that the regulators are no we’ll look at what Apple has done as DMA compatible.

App Store changes are being investigated for non-compliance

As we predicted, the EU today announced that it is unhappy with the changes made by Apple, and the company is now under investigation for non-compliance. Google and Meta are also under investigation for their own responses to the DMA.

The Commission today launched investigations into non-compliance under the Digital Markets Act (DMA) into Alphabet’s Google Play governance rules and Google Search self-preference, Apple’s App Store governance rules and the Safari and Meta opt-in ‘pay or consent model’ “.

The Commission suspects that the measures put in place by these watchdogs do not effectively meet their obligations under the DMA.

In addition, the Commission has initiated investigative steps related to Apple’s new fee structure for alternative app stores […] Apple’s new fee structure and other terms and conditions for alternative app stores and web app distribution (sideloading) may conflict with the purpose of its obligations under Article 6(4) of the DMA.

Safari’s selection screen is also under investigation

Another demand of the DMA was that Apple ensure that iPhone users have a free choice of web browser. The company announced that it will make this possible with a new options screen during iPhone setup.

This has already been implemented and seems to have at least a small effect. However, the EU is not happy with the specifics of this – which may simply be due to the wording used. This will probably be easily resolved.

The maximum fine is 10% of the total worldwide turnover

The maximum fines allowed under many laws are trivial for a company the size of Apple – but that’s how it is no the DMA case.

In case of violation, the Commission can impose fines of up to 10% of the company’s total worldwide turnover. These fines can reach up to 20% in the event of a repeat offence.

Apple’s turnover in 2023 was $383 billion, which could mean up to $38 billion in initial fines, which would reach $76 billion.

The investigation is intended to be completed in less than a year

Such investigations take time, but in this case the stated aim is to complete them in less than a year – which is lightning fast by the usual standard.

However, this will not be the end of things. If the EU finds Apple non-compliant, the Cupertino company will appeal the decision and then face literally years of legal battles as the case works its way up the court hierarchy.

Image from Pixabay

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