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Apple Faces EU Charges Over Breach of Digital Markets Act

Quiver Editor

European Union antitrust regulators charged Apple (AAPL) on Monday with breaching the bloc's tech rules, potentially leading to a significant fine for the tech giant, which is also facing another investigation into new fees imposed on app developers. The European Commission, the EU's antitrust and technology regulator, issued preliminary findings against Apple following an investigation launched in March. This marks the first charge under the Digital Markets Act (DMA), designed to curb the power of Big Tech and ensure fair competition for smaller rivals. A final decision is expected by March next year, with potential fines reaching up to 10% of Apple's global annual turnover.

The Commission criticized Apple's new business terms, which it claims restrict app developers from freely communicating with their end users and concluding contracts. EU antitrust chief Margrethe Vestager highlighted that these terms do not comply with the DMA, suggesting that Apple must make necessary changes to avoid fines. Apple, however, stated it has made several adjustments to comply with the DMA, following feedback from developers and the Commission. The tech giant remains confident in its compliance, asserting that over 99% of developers would pay the same or lower fees under the new terms.

Market Overview:
  • EU charges Apple with breaching tech rules under the Digital Markets Act.
  • Potential fine of up to 10% of Apple's global annual turnover.
  • New investigation into Apple's fees for app developers underway.
Key Points:
  • Apple's new terms allegedly restrict app developers' communication and contract capabilities.
  • Apple claims compliance with the DMA, ensuring most developers face no fee increases.
  • EU criticizes Apple's 'link-outs' for app steering and excessive App Store fees.
Looking Ahead:
  • EU's final decision on Apple expected by March next year.
  • Further investigation into Apple's new contractual requirements for third-party developers.
  • Ongoing scrutiny over Apple's AI-powered feature delays in the EU.

In addition to the charges, the EU has opened a new investigation into Apple's contractual requirements for third-party app developers and app stores. This probe will assess the necessity and proportionality of Apple's core technology fee, the multi-step process for downloading and installing alternative app stores on iPhones, and the eligibility requirements for developers to offer alternative app stores or distribute apps directly from the web. Apple's recent introduction of these fees in March has sparked criticism, notably from "Fortnite" creator Epic Games. Vestager also questioned Apple's recent announcement to delay the launch of its AI-powered features in the EU, implying it might be an attempt to sidestep the DMA regulations.

Apple remains under intense scrutiny as it navigates these regulatory challenges. The outcome of these investigations and the company's ability to adapt its business practices will be crucial in maintaining its market position and avoiding substantial financial penalties. The tech giant's approach to compliance and negotiation with the European Commission will set a precedent for how other tech companies may respond to similar regulatory pressures in the future.

About the Author

David Love is an editor at Quiver Quantitative, with a focus on global markets and breaking news. Prior to joining Quiver, David was the CEO of Winter Haven Capital.

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