EU goes after one of Apple's 'core businesses', could fine tech giant 10% of global earnings

The European Union (EU) has announced that Apple may be violating the Digital Markets Act (DMA) by restricting its competitors and charging them unfair fees.

This development follows an investigation that began in March 2024. By June, EU antitrust executive Margrethe Vestager called the findings “very serious,” leading to an official notice to Apple regarding these preliminary conclusions.

EU’s tightening noose
“Today is a very important day for the effective enforcement of the DMA,” said Vestager in a statement. “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.”

EU officials began scrutinizing Apple in March 2024 after receiving complaints about the company’s compliance with the DMA. By June, the findings seemed quite damning, prompting the EU to formally inform Apple of its preliminary conclusions about how it limits competitors on its App Store.

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One of the core issues is “steering,” which refers to app developers directing users to alternative payment options outside of Apple’s App Store. The EU argues that Apple’s current practices do not allow for proper steering, imposing multiple restrictions even when it permits some form of it.

Apple responds
In response, Apple denied the accusations in a statement to AppleInsider. The company emphasized that it has made several changes to comply with the DMA and believes its current business terms align with the law. Apple stated that over 99 per cent of developers would pay the same or less in fees under the new terms.

The Cupertino-based highlighted new business terms introduced to make compliance easier for developers, including the ability to direct users to the web to complete purchases at a competitive rate.

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Apple also asserted that these changes ensure compliance and that it has been in continuous dialogue with the European Commission.

What the preliminary investigation found
The EU’s report criticizes Apple’s new business terms, suggesting that they still do not allow developers the freedom to steer customers effectively. The Commission found that Apple imposes too many restrictions on steering and charges excessive fees for in-app purchases made within a week of a user following a link in the app.

Another significant issue is the “Core Technology Fee.” This fee, 50 euro cents ($0.53) per app installed after the first million, is now under investigation by the EU. The Commission plans to scrutinize this fee and other rules related to third-party app stores and sideloading.

This latest accusation follows a previous EU fine of approximately $2 billion against Apple for allegedly favouring its own Apple Music service over rivals like Spotify. The EU is also looking into whether this fine has prompted any changes in Apple’s practices.

What’s next for Apple
The preliminary report gives Apple an opportunity to present its case against these findings. If the European Commission ultimately rules against Apple, it could impose substantial fines. The DMA allows for daily fines based on a percentage of Apple’s global income, potentially reaching up to $1 billion per day. The EU expects to make a final decision by March 25, 2025.

In the meantime, the EU will continue its investigation into Apple’s practices. This includes a separate examination of the rules Apple imposes on alternative app stores. Apple must prepare a robust defence to counter these serious allegations.