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Apple is breaking the law according to the EU - this could be expensive

Samuel Buchmann
25/6/2024
Translation: machine translated

Preliminary EU investigation results conclude that Apple is implementing the Digital Markets Act inadequately. Meanwhile, the company wants to withhold the new AI features from Europe due to "regulatory uncertainties".

The preliminary finding concerns the so-called steering regulations. According to these, gatekeeper companies such as Apple must enable app developers to direct users to alternative channels for offers and content. For example, a website where a subscription is cheaper than if it is taken out directly in the app.

"Apple's terms and conditions do not allow developers to freely direct their customers," the commission writes. For example, developers cannot provide pricing information within the app. In addition, Apple charges a far too high referral fee if clicking on the external link leads to sales. It applies to all purchases of digital products that a user makes within seven days of leaving the app.

Apple: "Fees are competitive"

Apple vows to continue working with the commission. Spokesman Peter Ajemian tells The Verge: "Over the past few months, in response to feedback from developers and the European Commission, Apple has made a number of changes to comply with the DMA."

Ajemian describes the price for redirecting to external offers as "very competitive".

In addition to the investigation into the alleged breaches of the steering rules, the EU has launched a second investigation. It concerns the implementation of the alternative app stores - more specifically Apple's so-called "core technology fee" and the high hurdles for sideloading on the iPhone.

Fines up to 38 billion US dollars

If the Commission comes to the definitive conclusion that Apple is in breach of the DMA, the Californians could face a fine. This can amount to up to ten per cent of global turnover. In Apple's case, this would be around 38 billion US dollars - over a third of its annual profit. This maximum even doubles in the event of repeated offences.

It is unlikely that the EU would immediately impose such a high fine for the first offence. But the message from Competition Commissioner Margrethe Vestager is clear: the DMA is not a toothless paper tiger. Lip service and sham implementations of the new guidelines are not enough - the gatekeeper companies should implement the law as it is intended. Apple is not the only manufacturer under investigation.

No AI for Europe - Apple's tit-for-tat response?

The market launch of Apple Intelligence in languages other than English is not planned until 2025 anyway. The manoeuvre therefore seems like a pre-emptive threat. The undertone: if the EU insists on rigorous implementation of its laws, European users will receive a second-class experience in the future.

Header image: Shutterstock

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Samuel Buchmann
Senior Editor
Samuel.Buchmann@digitecgalaxus.ch

My fingerprint often changes so drastically that my MacBook doesn't recognise it anymore. The reason? If I'm not clinging to a monitor or camera, I'm probably clinging to a rockface by the tips of my fingers.

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