Apple may get fined 10% of worldwide turnover under EU’s Digital Markets Act over many ‘serious issues’

Apple is facing mounting challenges in the European Union over its compliance with the Digital Markets Act (DMA), with EU competition chief Margrethe Vestager highlighting “very serious issues” regarding the tech giant’s conduct.

Speaking to CNBC on June 18, Vestager expressed surprise at suspicions of Apple’s non-compliance, stressing the importance of ensuring fair play across all businesses, especially in critical areas like the App Store and payment mechanisms.

The ongoing investigation could result in substantial penalties for Apple.

If found in violation of DMA regulations regarding its App Store practices, the company could face fines amounting to 10 per cent of its global annual turnover.

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This will be on top of a recent $1.8 billion fine imposed on Apple for allegedly restricting competition by preventing apps like Spotify from informing users about cheaper subscription options outside of the App Store.

The EU’s current probes, which started on March 25, 2024, now go beyond Apple’s App Store policies. They are also examining whether Apple adequately allows users to exercise genuine choice within its ecosystem, or if it potentially breaches DMA provisions which are aimed at promoting fair competition.

Under the DMA, tech giants like Apple have been classified as ‘gatekeepers’ and must comply with specific rules. These include allowing users to install third-party apps and app stores, uninstall pre-installed apps, adjust default settings, and opt out of targeted advertising.

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Non-compliance with these rules could lead to significant fines. The EU Commission is authorised to impose penalties of up to 10 per cent of a company’s global turnover and escalate the figure for repeat offences. This includes imposing daily fines for continued non-compliance.

Moreover, the DMA empowers the EU Commission to restructure or even break up businesses to ensure compliance with its regulations, which is a rather stringent measure against monopolistic practices in the digital market.

Even in regions outside Europe, similar legislative efforts are underway globally to address concerns over Big Tech’s market dominance and anti-competitive practices. In India, for instance, the government has introduced the Digital Competition Bill to regulate the conduct of large technology companies.

As Apple navigates these legal challenges, the outcomes of the EU investigations could significantly impact its operations and strategic decisions globally. The tech industry awaits further developments as regulatory authorities continue to assertively address concerns over monopolistic practices and safeguard competition in digital markets.