Apple’s App Store violates EU digital markets law

Months after opening a non-compliance case against Apple and the Digital Markets Act (DMA), the European Commission has shared its preliminary findings with Apple. And the bottom line is that the current App Store rules are in violation of the DMA. Confirmed violations of the DMA can lead to fines of up to 10% of annual global turnover.

‘Do different’ should be their new slogan,” EU internal market commissioner Thierry Breton wrote in X. “For too long, Apple has squeezed out innovative companies – denying consumers opportunities and new elections.”

In this particular case, the European Commission believes that third-party developers should be able to inform customers about alternative purchase options – free of charge.

For example, developers who have released apps on the App Store cannot advertise different prices or alternative distribution channels on their apps. While Apple now allows developers to include a link on their site, the European Commission believes there are too many limitations with this linking mechanism.

Even if developers redirect users to their websites and handle transactions on their websites, they must report the transactions to Apple and pay a commission. Apple only waives a 3% payment processing fee for web purchases.

“Apple has made a number of DMA-compliant changes in response to feedback from developers and the European Commission,” the company said in a statement. “We are confident that our plan complies with the law and estimate that more than 99% of developers would pay the same or less fees to Apple under the new business terms we created.”

In addition to these preliminary findings, the European Commission is opening a third non-compliance investigation into Apple’s new contractual terms for EU developers. This time, the Commission will focus on Apple’s controversial core technology fee (CTF) and alternative app markets.

European developers can stay on the standard business terms or choose new business terms that allow them to distribute their apps outside the App Store. However, these new conditions lead to a fee of €0.50 per app installed after one million downloads.

The company has already adjusted the CTF so that it does not apply to free, non-commercial apps. There is also a three-year transition period for small developers who launch a successful app and get more than one million downloads for the first time. But that doesn’t change much in the long run. With this new formal investigation, the EC will determine whether the CTF effectively complies with the DMA.

If you’ve tried to install a third-party app store in the EU, such as AltStore, Setapp Mobile or Aptoide, you may have noticed that it takes quite a few taps. First you get an error in your web browser. You must open the Settings app, accept app installations from this page, return to your web browser, download the alternative store again, and accept pop-ups about the risks involved in a third-party app store. The EC will review this “multi-step user journey” and its compliance with the DMA rules.

“We are concerned that Apple has designed its new business model to discourage app developers and end-users from taking advantage of the opportunities DMA offers,” Margrethe Vestager, the Commission’s EVP responsible for policy, said in a speech. competition.

“The DMA’s letter is clear: Gatekeepers must allow alternative app stores to be placed on their platform and for consumers to be fully informed about the offers available to them, so that they can freely choose where they want to receive their applications. , and under what conditions”, she added.

As for today’s preliminary findings, Apple can now respond to the European Commission in writing. The final decision is expected a year after the opening of the official investigation, which means that Apple can negotiate with the EU and adjust its business terms once again to avoid a heavy fine.