Tuesday, July 16, 2024

Apple’s App Store Under Fire as EU Enforces Digital Markets Act

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In a groundbreaking move, the European Commission has accused Apple of stifling competition on its App Store, making it the first time EU regulators have used new digital rules against a Big Tech company. The accusations come as part of the EU’s effort to enforce its Digital Markets Act (DMA), which aims to open up the market and level the playing field for startups. The EU has been preparing for this moment for years, and now it is taking steps to ensure that Apple complies with the DMA rules.

One of the main concerns raised by Brussels: the restrictions Apple imposes on developers’ ability to direct their customers to promotions outside the App Store. If found guilty, Apple could face a penalty of up to 10% of its global annual revenue, potentially amounting to tens of billions of dollars, according to the Financial Times.

Margrethe Vestager, the EU’s executive vice-president in charge of digital policy, emphasized the importance of a fair and open marketplace, stating, “We are dealing with the biggest and most valuable companies on the planet. The DMA is not an excessive ask. [It] is plain vanilla to ask for a fair, open and contestable marketplace.” She expressed surprise that some of the most valuable companies do not take compliance as a badge of honor.

In addition to the accusations related to the App Store, the European Commission also announced an investigation into whether Apple’s developer fees breach EU rules. The fees include a charge of 50 cents per download for apps used by more than 1 million people. Brussels is examining whether Apple imposes too many restrictions on users to download and install alternative app stores.

Apple has responded to the accusations, stating that it has made changes to comply with the DMA and that it is confident its plan aligns with the law. The company estimates that more than 99% of developers would pay the same or less in fees under the new business terms it has created.

However, as PYMNTS reported, the conflict between Apple and the EU has escalated further, with Apple deciding to withhold several new technologies from consumers in the European Union. The company will block the release of Apple Intelligence, iPhone Mirroring, and SharePlay Screen Sharing in the EU this year, citing concerns over the interoperability requirements of the DMA compromising user privacy and data security.

Apple Intelligence, an artificial intelligence (AI) technology showcased at the company’s Worldwide Developers Conference, offers text summarization, image creation, and data retrieval capabilities. The decision to halt the rollout of these features means that consumers in all 27 EU nations will not have access to these technologies for now.

Earlier this year, Apple was fined €1.8 billion by Brussels regulators for stifling competition from rival music streaming services. The company is currently contesting the fine in EU courts. German MEP Markus Ferber emphasized the need for significant fines if Apple is found to have infringed the DMA, stating, “That is the only language Big Tech understands.”

 

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