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Apple Charged Huge Fine for Violating EU’s DMA Rules

Apple has become the first company to be charged under the European Union’s (EU) new Digital Markets Act (DMA). The charges pertain to the company’s alleged unfair restrictions on developers within its App Store. The charges were announced by Margrethe Vestager, the European Commission’s executive vice president overseeing competition policy.

Apple Charged Huge Fine for Violating EU's DMA Rules

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The European Commission’s findings indicate that Apple’s App Store steering policies infringe upon the DMA’s rules designed to promote fair competition.

Steering involves directing consumers towards offers outside of the app store, in this case, Apple’s App Store, potentially reducing the dependency of developers and consumers on a single marketplace.

The DMA is a regulatory framework targeting “gatekeepers,” which includes tech giants like Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft.

These companies are mandated to adhere to the rules set forth by the DMA by March 2024 to foster a competitive market environment.

Apple faces financial penalties with fines reaching up to 10% of its global annual revenue, approximately $38 billion based on the previous year’s figures. For repeat violations, fines could escalate to 20%.

In 2020, Spotify’s antitrust complaint led to an investigation and fines totaling €1.84 billion for anti-steering practices that predate the DMA.

The European Commission is actively examining Apple’s support for alternative iOS app stores, focusing on practices such as the Core Technology Fee and the procedural hurdles users face when installing third-party marketplaces.

The investigation also looks into whether Apple’s requirements for third-party developers and app stores effectively restrict market access and competition.

Apple has expressed concerns over regulatory uncertainties linked to the DMA citing them as reasons for delaying the rollout of new features in iOS 18 for European users.

Other major tech companies including Meta and Google are also being examined for potential non-compliance with the DMA.

E.U. regulators claim that Apple imposes unfair restrictions on developers those creating games, music services, and other applications.

These restrictions allegedly hinder developers from informing users about deals and content available outside of Apple’s App Store.

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The App Store’s rules make developers more dependent on Apple and reduce their ability to compete by offering consumers better deals or alternative services.

Apple faces a penalty of up to 10 percent of its global revenue, which could increase to 20 percent for repeat offenses.

With Apple’s reported revenue being $383 billion last year. The imposition of such penalties show the seriousness with which the E.U. is treating violations of the DMA.

The E.U. is also examining Apple’s introduction of a “core technology fee,” which charges developers 50 euro cents for every app download after the app has been downloaded more than one million times in a year.

This fee has been criticized by companies like Spotify and Epic Games as an additional anticompetitive burden.

Apple’s App Store practices are not only under scrutiny in the E.U. but also in other regions. The U.S. Justice Department has sued Apple over allegations of maintaining an illegal monopoly in the smartphone market.

Countries like Japan and the U.K. are also considering regulations to curb Apple’s control over its App Store.

Apple argues that it has made several changes to its policies to comply with the DMA. These include allowing users to download rival app stores and reducing the service fees it charges companies for sales through the App Store.

Apple maintains that its rules are fair and that its platform provides value to developers by giving them access to a large consumer base.

The company is confident that its actions comply with the DMA and claims that over 99% of developers would pay the same or less under the new fee structure.

The E.U. has positioned itself as a leader in regulating the tech industry. The DMA and other regulations like the Digital Services Act (DSA), which governs social media and online content are part of an effort to ensure fair competition and consumer protection.

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