The European Commission has accused Apple of allegedly violating the Digital Markets Act (DMA) by restricting app developers from offering more affordable alternative payment methods to consumers. The agency also said that it is opening another investigation against Apple for imposing new contractual rules on developers, which includes a new fee called “Core Technology Fee.”
In a preliminary finding made public on June 24, the agency found that Apple's App Store rules not only restrict developers from offering alternative pricing information within their apps, but also restrict them from informing users about alternative app distribution channels outside the App Store.
“Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers,” said Margrethe Vestager, executive vice-president of competition policy at the European Commission.
Under Article 5(4) of the DMA, app store gatekeepers are required to allow app developers to direct consumers to offers outside the app stores, without any fee.
If the agency’s preliminary views are confirmed, it will take a non-compliance decision within 12 months from the opening of proceedings on 25 March 2024.
Though Apple allows app developers to redirect consumers to a web page by using a link-out in their app, the process is subject to several restrictions, which prevent app developers from promoting offers and executing contracts through the distribution channel of their choice.
It was also found that Apple charges developers a fee for every purchase of digital goods or services within seven days after a link-out from the app.
Further, the agency has opened a new investigation over Apple’s new rules that it announced this January to comply with the DMA.
“We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and sideloading,” said Vestager.
She added that the developer community is eager to offer alternatives to the App Store and the investigation will ensure that Apple does not undermine their efforts.
In January, Apple announced that it will allow developers to distribute iOS apps through alternative app stores in accordance with DMA. However, to make up for the loss of revenue Apple introduced something called a core technology fee of €0.50 for each first annual install per year on apps with over 1 million annual installs in the EU, whether they are downloaded from the App Store or another app marketplace. The iPhone maker also introduced an additional fee of 3% on iOS apps for using App Store’s payment processing mechanism.
The agency suspects that these new rules and the new core technology fee fall short of ensuring effective compliance with DMA. The agency will also investigate multi-step user journey to install apps from third party stores to ensure that Apple is not deliberately making the process complex. They will also look into the eligibility requirements for developers to offer alternative app stores.
Apple's new rules to comply with the DMA drew flak from the developer community, including CEOs of Spotify and Epic Games, who called the compliance plan “misleading” and “malicious” as it will continue to hurt developers.
“Forcing developers to choose between App Store exclusivity and the store terms, which will be illegal under DMA, or accept a new also-illegal anti-competitive scheme rife with new junk fees on downloads and new Apple taxes on payments they don’t process,” Tim Sweeney, CEO of Epic Games, said in a post on X on January 26.
In March, the European Commission had found Apple guilty of abusing its control over the App Store to stifle competition in the music streaming market. The agency also slapped Apple with a fine of €1.8 billion.
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