EU Investigates Apple’s App Store: Concerns Over Competition

The European Commission has escalated its scrutiny of Apple’s App Store practices under the Digital Markets Act (DMA), indicating that the current rules may violate competition regulations.

Following initial findings shared with Apple, the Commission asserts that the App Store policies restrict developers from freely informing customers about alternative purchasing options without facing penalties. These findings are pivotal as violations of the DMA could lead to fines of up to 10% of Apple’s global annual turnover.

Thierry Breton, the EU’s internal market commissioner, criticized Apple for stifling competition and innovation, suggesting that the company needs to adopt a more open approach.

Specifically, the Commission argues that developers should be allowed to advertise different prices and alternative distribution channels within their apps, a freedom currently restricted by Apple’s guidelines.

EU Investigates Apple's App Store: Concerns Over Competition
EU Investigates Apple’s App Store: Concerns Over Competition

Despite recent adjustments by Apple, including allowing developers to link out to external payment options, the Commission remains concerned about the limitations and conditions imposed on this mechanism.

Notably, even transactions handled externally by developers must still be reported to Apple, with a commission fee applicable in many cases, further complicating the regulatory landscape.

In response to these concerns, Apple contends that its recent adjustments align with legal requirements and claims that the majority of developers would not experience increased costs under the revised terms.

However, the Commission has initiated another investigation into Apple’s Core Technology Fee (CTF) and alternative app marketplace policies, aiming to evaluate their compliance with DMA standards.

Moreover, the Commission is examining the user experience hurdles associated with installing third-party app stores on Apple devices within the EU.

Margrethe Vestager, the Commission’s Executive Vice President for competition policy, has emphasized the DMA’s mandate for gatekeepers like Apple to facilitate the establishment of alternative app stores and ensure transparent choices for consumers.

Looking ahead, Apple has the opportunity to respond to the Commission’s preliminary findings, with a final decision expected within a year. This period allows for potential negotiations and adjustments to Apple’s business practices to avoid significant penalties.

The outcome of these investigations will likely influence the future landscape of app distribution and competition in the European Union.

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