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New EU competition rules in the digital sector target large technology companies, especially Apple

EU regulators accuse Apple of violating new rules on digital competition by preventing software developers on the App Store from redirecting users to other platforms. (Matthias Schrader / AP Photo)

LONDON — European Union regulators on Monday made their first allegations under the bloc’s new digital competition rulebook, accusing Apple of preventing app makers from directing users to cheaper options outside the App Store.

The European Commission said its preliminary findings said the restrictions imposed by the iPhone maker on developers using its mobile app store violate the 27-nation bloc’s Digital Markets Act.

The rule, also known as the DMA, is a comprehensive set of rules designed to prevent tech “gatekeepers” from dominating digital markets under threat of heavy fines. It came into force in March and launched a first round of investigations, including a separate, ongoing probe into whether Apple is doing enough to allow iPhone users to easily switch web browsers, as well as other cases involving Google and Meta.

Apple is under pressure on both sides of the Atlantic to remove some of the barriers to competition surrounding its lucrative iPhone franchise. The US Department of Justice filed a comprehensive antitrust lawsuit against Apple this year, accusing the company of illegally monopolizing the smartphone market and excluding competitors, stifling innovation and keeping prices artificially high. App makers such as Spotify had complained for years about Apple’s requirement that subscriptions can only be purchased via iOS apps, which allows the company to earn up to 30 percent commission.

According to the DMA regulations, app developers must be allowed to inform customers about cheaper purchasing options and make them aware of these offers.

The Commission stated that the App Store rules “prevent app developers from freely directing consumers to alternative channels for offers and content.”

Apple now has the opportunity to respond to the findings. The Commission must decide on Apple’s compliance with the rules by March 2025. The company faces fines of up to 10% of its global turnover, which could amount to billions of euros or daily penalties.

Regulators focused on a 50-cent (54-cent) “core technology fee” that Apple now charges developers every time their apps are downloaded and installed from outside Apple’s App Store. The DMA’s provisions allow alternative app stores to offer consumers more choice.

The Commission said the new conditions were “a prerequisite for accessing some of the new features enabled by the DMA.” Competitors had criticised the fee, saying it would prevent many existing free apps that do not charge fees from abandoning the sinking ship.

“We are concerned that Apple’s new business model makes it too difficult for app developers to act as alternative marketplaces and reach their end users on iOS,” said EU Competition Commissioner Margrethe Vestager.

Apple Inc. said that in recent months the company has made “several changes to comply with the DMA requirements based on feedback from developers and the European Commission.”

“We are confident that our plan is lawful and estimate that more than 99% of developers would pay the same or lower fees to Apple under the new terms and conditions we have created,” the company said in a statement. “All developers doing business on the App Store in the EU will have the opportunity to take advantage of the features we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive price.”

The company said it would “continue to listen to and cooperate with” the Commission.

The EU has been conducting a similar investigation since 2020 to determine whether Apple’s in-app purchasing system and restrictions violate Brussels antitrust rules. “However, to avoid multiple investigations into the same conduct,” the Commission said on Monday that it would close the investigation to focus on the investigation under the DMA, which clarifies what Apple is not allowed to do.

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