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Brussels plans to sue Apple for stifling competition in its mobile app stores, marking the first time EU regulators have targeted a big tech company with new digital rules.
The European Commission found that the iPhone maker failed to comply with its obligations to allow app developers to “steer” users to services outside the App Store without charging them, according to three people familiar with the investigation.
The case is the first to be brought against tech companies under the Digital Markets Act, a landmark law aimed at forcing powerful “online gatekeepers” to open up their businesses to competition within the EU.
The European Commission said in March that it was investigating Apple, as well as Alphabet and Meta, under powers granted by the DMA, and that a complaint against Apple is expected to be announced within weeks, two people familiar with the matter said.
The regulators have only made preliminary findings and Apple could still take steps to correct its practices, which could lead regulators to reconsider their final decision, the people said, adding that the timing of the announcement could also change.
The EU could announce charges against other tech companies as regulators continue to investigate whether Google parent Alphabet favors its app store and whether Facebook parent Meta uses personal data for advertising.
If Apple is found to be in violation of the DMA, it could face daily fines of up to 5% of its average daily global revenue, which currently stands at just over $1 billion.
The move comes as competition watchdogs around the world are stepping up scrutiny of big tech companies and their market power. In March, the United States filed an antitrust lawsuit against Apple, accusing it of using its power in the smartphone sector to crush rivals and limit consumer choice.
Epic Games, which sued Apple over the App Store in 2020, is also awaiting a ruling from a California federal court on whether Apple failed to comply with a U.S. injunction banning the company's operating rules, after a series of court hearings in recent weeks.
In January, Apple announced historic changes to its iOS mobile software, App Store and Safari browser in the EU.
The changes, an effort to appease regulators in Brussels, meant Apple would allow users to access rival app stores and download apps from other sources. The changes also included a drastic cut in commission paid by companies that use the App Store to sell digital goods and services, from 30% to 17%.
But the EU is also considering whether these fee changes adequately comply with new digital rules. Apple has introduced new fees in Europe for developers of apps with more than one million users, including a “core technology fee” of 50 cents for every first user payment. Apple also plans to charge app developers who use its payment processors an additional 3% fee.
Some developers have argued that they could be forced to pay higher fees as a result of the fee changes.The EU may announce an initial rate for developer fees, according to a person familiar with the Commission's thinking.
Sensor Tower's analysis found that consumer spending on Apple's App Store will remain “relatively flat” through the second quarter of 2024, suggesting that the EU rules have not yet impacted the company's revenue.
Apple declined to comment but pointed to an earlier statement that it “is confident that our plans comply with the DMA and continues to engage constructively with the European Commission as its investigation progresses.”
The EU declined to comment.
