New EU charges on the horizon for Apple over App Store restrictions

Apple Inc. is once again in the cross-hairs of the European Union’s powerful antitrust enforcers. The iPhone maker is under renewed legal pressure for alleged breaches of the Digital Markets Act (DMA), a comprehensive new law aimed at the world’s largest tech firms.

Apple is close to receiving another formal charge sheet if it does not resolve concerns over its App Store policies, people familiar with the matter said. Regulators are paying particular attention to how the tech firm 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 branch, set a deadline of June 26 for Apple to develop concrete proposals to bring its arrangements in line with international standards.

The regulators said they were prepared to go even further if the iPhone maker did not comply, with the ability to levy daily fines of up to 5% of Apple’s average daily worldwide turnover.

The DMA can also be seen as a tool for the European Commission to apply strict rules on big digital platforms with stakeholder positions in the market. Apple, Google, Meta, Amazon, Microsoft, and the parent company of TikTok, ByteDance, are all included under the new provisions, which become effective on March 1, 2024.

The EU hasn’t confirmed the next steps. Still, officials with knowledge of the discussions say the Commission is becoming increasingly impatient with Apple’s response and is ready to act quickly if required.

Apple pushes back against changing rules

Apple says it has been working hard at following the rules. A spokesman said the company is frustrated with what it views as vague and wavering expectations from EU regulators.

“The goalposts keep moving,” Apple said in a statement, adding that it is being asked to comply with shifting interpretations of the DMA. The company says it has invested hundreds of thousands of hours of engineering time to comply with the regulations.

The tech firm also cautioned that the EU’s requirements would undermine innovation and user privacy. The company contends that requiring it to turn over its tightly controlled ecosystem would make devices less secure and violate intellectual property laws.

The company has also argued that offering developers the ability to lead people to an alternative payment method could degrade the quality and security of the user experience, which it insists it spends great effort ensuring is of good quality.

Regulators widen digital law enforcement

Hours after Apple was fined €500 million in April, Meta Platforms Inc., the company behind Facebook and Instagram, was slapped with a €200 million penalty for not giving users a real choice to personalized ads based on its “pay or consent” model. That case was also related to DMA violations.

Over the last decade, the EU has hit Google with more than $8 billion in fines for various competition law violations, including search bias and the bundling of mobile apps. Apple, meanwhile, is still fighting a €13 billion tax order handed down in 2016 after the Commission alleged that the company received illegal state aid from Ireland.

Among other rulings, the Commission has ordered Amazon to change how it treats third-party sellers, directing Apple to open its tap-to-pay chip to rival wallets. It also opened a continuing investigation into whether Microsoft’s bundling of Teams into Office is unfair to rivals.

With the June 26 deadline looming, Apple is poised at a critical juncture: Offer an olive branch that pleases Brussels, or suffer additional legal and financial pain. 

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