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Apple accused of breaching digital competition rules by European Union

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European Union regulators claim Apple is breaking the bloc’s new rules on digital competition with its policies that prevent app developers from directing users to cheaper alternatives elsewhere

The logo of Apple is illuminated at a store in the city center in Munich, Germany. European Union regulators have accused Apple of breaking new rules on digital competition (Copyright 2019 The Associated Press. All rights reserved)

European Union regulators have accused Apple of violating new digital competition rules by enforcing App Store policies that prevent app developers from directing users to cheaper alternatives elsewhere.

The European Commission has stated that, based on its initial investigation findings, the iPhone manufacturer has breached the Digital Markets Act (DMA) of the 27-nation bloc. The DMA, which came into effect in March, is a comprehensive set of regulations designed to stop tech “gatekeepers” from monopolising digital markets.

According to these provisions, app developers should be able to inform customers about cheaper purchasing options and guide them towards these offers. The commission, the executive branch of the bloc, said that Apple’s App Store policies “prevent app developers from freely steering consumers to alternative channels for offers and content.”

Apple now has an opportunity to respond to these findings, which will then be evaluated by the commission. A final decision on Apple’s compliance must be made by March 2025. The tech giant could face penalties amounting to up to 10% of its global revenue, potentially equating to billions of euros, or daily fines.

The commission is also maintaining pressure on Apple by launching a new investigation into the company’s compliance with the DMA, focusing on new contractual terms offered to app developers. Regulators have honed in on a “core technology fee” of 50 euro cents (54 cents) that Apple has started to charge developers each time their apps are downloaded and installed from platforms other than the App Store.

This move comes as the Digital Markets Act (DMA) paves the way for alternative app stores, aiming to offer consumers more options. The fee has been met with criticism from competitors who argue it could discourage many free apps, which currently avoid fees, from switching over. Apple Inc. has indicated that over recent months, it “has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission.”

The tech giant added: “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. 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.”

Apple also highlighted its ongoing commitment to dialogue, saying it will “continue to listen and engage” with the commission.

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