The European Union is charging Apple with violating the Digital Markets Act (DMA), a move that could cost the tech giant up to $38 billion if found guilty. This unprecedented action follows complaints that Apple isn't doing enough to comply with the region's stringent DMA regulations.
The DMA, which came into effect for Apple in March, aims to promote fair competition and more open markets. One of its key provisions requires Apple to allow "steering"—a practice where developers can direct users to payment methods outside the App Store—as well as supporting third-party app stores. Although Apple has technically complied with these requirements, developers argue that the company is violating the spirit of the law.
Epic Games CEO Tim Sweeney has described Apple’s implementation of the DMA policies as “malicious compliance,” continuing a long-standing feud that began when Apple removed Fortnite from the App Store for steering users to Epic's own payment methods. Sweeney and other developers have criticized Apple’s "junk fees" for outside payments and third-party stores, a sentiment that the EU seems to share.
In a recent press release, the European Commission announced formal charges against Apple for violating its anti-steering rules. Currently, Apple only allows developers to link users to an external website, which the EU argues limits developers' ability to effectively market to or charge consumers. Additionally, Apple imposes fees on digital purchases made within seven days after a user clicks an external link.
The Broader Impact of the Digital Markets Act
EU Commissioner Margrethe Vestager, who leads Europe's competition policy, stated, “Our preliminary position is that Apple does not fully allow steering.” Vestager also mentioned that the Commission has opened proceedings to investigate Apple's compliance with third-party app store rules, particularly focusing on the Core Technology Fee and the complex process users must follow to install third-party app stores.
“For too long Apple has been squeezing out innovative companies—denying consumers new opportunities & choices,” EU Commissioner for Internal Market Thierry Breton posted on X, formerly Twitter.
Apple is just the first company to face scrutiny under the DMA. The rules also apply to other tech giants like Alphabet (Google), Amazon, Meta, Microsoft, and ByteDance (TikTok). The Commission is also investigating Alphabet and Meta for non-compliance and gathering information on Amazon.
What This Means for the Tech Industry
The outcome of this case could set a significant precedent for the entire tech industry. If the EU successfully levies a substantial fine against Apple, it could signal a more aggressive regulatory approach towards other major tech companies. This could lead to increased scrutiny and enforcement actions, compelling these companies to reassess and possibly alter their business practices to avoid similar penalties.
Steps Developers Can Take
1. Stay Informed: Developers should stay updated on the latest regulations and guidelines from the EU and other regulatory bodies to ensure compliance.
2. Leverage Alternative Platforms: Exploring and utilizing third-party app stores and alternative payment methods can reduce dependency on major platforms like Apple's App Store.
3. Advocate for Fair Practices: By voicing concerns and working together, developers can influence policy changes and promote a fairer digital marketplace.
Conclusion
If Apple is found guilty of infringement, the EU could impose fines up to 10% of the company's annual global revenue, amounting to around $38 billion based on last year's earnings. The penalties could double to 20% for repeated offenses.
Apple has yet to respond to Lifehacker’s request for comment. However, Apple spokesperson Peter Ajemian told The Verge, “Throughout the past several months, Apple has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission…we will continue to listen and engage with the European Commission.”
Earlier this year, Apple faced another setback when EU antitrust regulators fined the company approximately $2 billion in March following an antitrust complaint filed by Spotify in 2020.
