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Apple Inc. is once again under the scrutiny of powerful antitrust authorities in the European Union. The iPhone maker is facing legal pressure due to alleged violations of the Digital Markets Act (DMA), a comprehensive new law aimed at the world's largest technology companies.
Apple is close to receiving another official indictment if it does not resolve issues related to its App Store policy, sources familiar with the matter reported. Regulators are paying special attention to how the tech company prohibits app developers from informing customers about cheaper alternatives or subscription plans outside the App Store, a practice known as 'anti-steering'.
The European Commission, the EU's executive body, set a deadline of June 26 for Apple to develop specific proposals to align its agreements with international standards.
Regulators have stated they are prepared to go further if the iPhone maker does not meet the requirements, with the possibility of imposing daily fines of up to 5% of Apple's average daily global turnover.
The DMA can also be seen as a tool for the European Commission to enforce strict rules on large digital platforms with stakeholder positions in the market. Apple, Google, Meta, Amazon, Microsoft, and TikTok's parent company, ByteDance, are included in the new provisions that will come into effect on March 1, 2024.
The EU has not confirmed next steps. However, officials familiar with the discussions say the Commission is becoming increasingly impatient regarding Apple's response and is ready to act quickly if necessary.
Apple opposes changing the rules
Apple states that it is working diligently to comply with the regulations. A company representative said that the company is frustrated by what it considers to be uncertain and fluctuating expectations from EU regulators.
'Parking gates continue to move,' Apple stated, adding that it is being asked to comply with changing interpretations of the DMA. The company claims to have spent hundreds of thousands of engineering hours to comply with the rules.
The tech firm also warned that EU requirements would undermine innovation and user privacy. The company argues that the requirement to hand over its tightly controlled ecosystem would make devices less secure and violate intellectual property laws.
The company also claims that allowing developers to direct people to alternative payment methods could degrade the quality and safety of the user experience, which it insists it puts significant effort into maintaining at a high standard.
Regulators are ramping up digital enforcement
Apple's problems in Europe reflect broader repressive regulation against large technology companies. The European Commission has intensified enforcement through new antitrust rules and stricter oversight of digital platforms, including social media influencers and gaming debates, which are now subject to the updated Digital Markets Act.
Hours after Apple was fined 500 million euros in April, Meta Platforms Inc., the company behind Facebook and Instagram, was fined 200 million euros for failing to provide users with a genuine choice of personalized ads based on its 'pay or agree' model. This case was also related to violations of the DMA.
Over the past decade, the EU has imposed fines on Google totaling more than 8 billion dollars for various competition law violations, including search bias and the bundling of mobile apps. Meanwhile, Apple is still grappling with a tax ruling of 13 billion euros issued in 2016 after the Commission stated that the company received illegal state aid from Ireland.
Among other rulings, the Commission ordered Amazon to change how it treats third-party sellers and mandated Apple to open its contactless payment chip to competing wallets. It has also initiated an ongoing investigation into whether the integration of Microsoft Teams into Office is unfair to competitors.
As the deadline of June 26 approaches, Apple finds itself in a critical situation: to offer Brussels an olive branch that will be well received or to incur further legal and financial losses.
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