Apple the first to be found guilty of under EU digital law

Apple has secured the dubious honour of becoming the first company to be found in breach of the EU’s new Digital Markets Act, for “squeezing out innovative companies” by charging them for every app purchase made via its platform.

The European Commission said it has sent its preliminary findings to Apple after an investigation launched in March, explaining that it believed the company’s rules of engagement did not comply with the DMA, “as they prevent app developers from freely steering consumers to alternatives channels for offers and content”.

The main bone of contention for the Commission is that Apple charges 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”.

The Commission insists the legislation requires 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”.

The Commission also found that Apple made it hard for customers to find the pricing information, requiring them to “link out” to a webpage where a customer could then find the contract details.

Streaming service Spotify has been at war with Apple since 2011, when the iPhone giant started charging developers 30% of any subscription fees to use its IAP billing system. The row has been raging ever since, and with Apple refusing a raft of Spotify initiatives. In 2019, Spotify reported Apple to the Commission over its anti-competitive practices.

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 Meta.

EU internal market commissioner Thierry Breton wrote on X: “For too long Apple has been squeezing out innovative companies — denying consumers new opportunities and choices.”

Apple has 12 months to comply with the latest ruling or face fines of up to 10% of its global revenues. It is said that the Commission hopes ongoing dialogue will lead to compliance rather than sanctions.

In response, Apple insists it has 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.

It 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 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.”