Apple has been found to be in breach of sweeping new EU laws designed to allow smaller companies to compete and allow consumers to find cheaper and alternative apps in the tech business’s app store.
The European Commission, which also acts as the EU antitrust and technology regulator, said it had sent its preliminary findings to Apple after an investigation launched in March.
“For too long Apple has been squeezing out innovative companies — denying consumers new opportunities and choices,” said Thierry Breton, the European commissioner responsible for digital markets, on X.
In preliminary findings, against which Apple can appeal, the European Commission said it believed its rules of engagement did not comply with the Digital Markets Act (DMA) “as they prevent app developers from freely steering consumers to alternatives channels for offers and content”.
The company has 12 months to comply before it face fines of up to 10% of its global revenues but the EU hopes ongoing dialogue will lead to compliance rather than sanctions.
In addition, the commission has opened a new non-compliance procedure against Apple over concerns its new contract terms for third-party app developers also fall short of the DMA’s requirements.
It is the third non-compliance investigation opened by the commission into Apple since the DMA came into force last year and the sixth launched in total, with two other inquiries outstanding into Google and one into Meta, the owner of Facebook.
At the heart of Monday’s findings are three elements of Apple’s practices, including fees charged to app developers for every purchase made within seven days of linking out to the commercial app.
The commission says a fee for such matchmaking is justifiable but what Apple charges goes “beyond what is strictly necessary”.
In its preliminary findings on its earlier investigation, the EU has reiterated that the new digital laws require Apple to ensure that developers should be able “free of charge to inform their customers of alternative cheaper purchasing possibilities, steer them to those offers and allow them to make purchases”.
As part of the new investigation, the commission is examining 0.50c charge, or “core technology fee”, Apple demands every time a developer’s app is installed on a phone.
The allegations that Apple is breaking EU law are the first against a tech company under the DMA, landmark legislation introduced last August to ensure six designated “very large online platforms” including Google, Amazon, Meta and ByteDance (TikTok) compete fairly.
The commission also found that Apple made it difficult for customers to find the pricing information, requiring them to “link out” to a webpage where a customer could then find the contract details.
“If the commission’s preliminary views were to be ultimately confirmed, none of Apple’s three sets of business terms would comply with article 5(4) of the DMA, which requires gatekeepers to allow app developers to steer consumers to offers outside the gatekeepers’ app stores, free of charge,” the Commission said.
The EU likened Monday’s preliminary findings to the halfway stage in a formal anti-trust investigation during which a company is shown a statement of objection and given time to rectify its anti-competitive practices.
Apple said it had made a number of changes to comply with the DMA in the past few months in response to feedback from developers and the European Commission investigators.
“We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created,” it said.
“All developers doing business in the EU on the App Store have the opportunity to utilise the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate. As we have done routinely, we will continue to listen and engage with the European Commission.”