Apple faces $38billion fine for breaching European regulator rules

Wednesday, June 26, 2024 - Tech giant, Apple is reportedly facing a hefty $38billion fine for breaching European regulator rules over the way it runs the App Store.

According to Mail Online, European Union regulators on Monday levelled their first charges under the bloc´s new digital competition rulebook, accusing the tech giant of preventing app makers from pointing users to cheaper options outside its App Store.

The European Commission said that according to the preliminary findings of its investigation, the restrictions that the iPhone maker imposes on developers using its mobile App Store had breached the 27-nation bloc's Digital Markets Act (DMA).

The company is now facing a fine of 10 per cent of their global revenue for 2023, which came to a staggering $383billion, due to the breach.

The DMA is a sweeping set of regulations aimed at preventing tech 'gatekeepers' from cornering digital markets under threat of heavy financial penalties.

The commission opened an initial round of investigations after it took effect in March, including a separate ongoing probe into whether Apple is doing enough to allow iPhone users to easily change web browsers, and other cases involving Google and Meta.

Under the DMA's provisions, app developers must be allowed to inform customers of cheaper purchasing options and direct them to those offers.

The commission, the bloc's executive arm, said Apple's App Store rules 'prevent app developers from freely steering consumers to alternative channels for offers and content.'

Apple now has a chance to respond to the findings and the commission must make a final decision on Apple´s compliance by March 2025.

The commission kept up the pressure on Apple, simultaneously opening a new investigation into contractual terms that it's offering app developers.

Regulators zeroed in on a 'core technology fee' of 54 cents that Apple is now charging developers for each time their apps are downloaded and installed from outside Apple's App Store.

The DMA's provisions open the way for alternative app stores to give consumers more choices.

The commission said the new terms are a 'condition to access some of the new features enabled by the DMA.

Rivals had criticized the fee, saying it would deter many existing free apps, which don't pay any fees, from jumping ship,' the European Commissioner for Competition, Margrethe Vestager, said on social media.

'We are concerned Apple´s new business model makes it too hard for app developers to operate as alternative marketplaces & reach their end users on iOS,' Vestager added.

Apple Inc. said over the past several months, it 'has 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% of developers would pay the same or less in fees to Apple under the new business terms we created,' the company said in a statement.

'All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate.'

The company said it will 'continue to listen and engage' with the commission.