Apple’s App Store rules violate EU tech rules, regulators say

The EU opened an investigation into Apple, Alphabet and Meta in March under a landmark new law known as the Digital Markets Act (DMA), which aims to curb the power of big tech companies. So-called anti-steering rules were one of the main areas of focus of the investigation. Under the DMA, tech companies are not allowed to prevent businesses from telling their users about cheaper options for their products or subscriptions outside of an app store.

On Monday, regulators said in their preliminary findings that Apple violated the DMA because its App Store rules “prevent app developers from freely directing consumers to alternative channels for offers and content.” .

CNBC has contacted Apple for comment.

Apple only allows driving through a system in which app developers can provide a link that takes users to a web page where they can then purchase content, such as a subscription, according to the Commission. However, this process is “subject to several restrictions imposed by Apple that prevent application developers from communicating, promoting offers and entering into contracts through the distribution channel of their choice”, noted the Commission.

Regulators also said that the fees Apple charges developers for initially acquiring new customers through the App Store “exceed what is strictly necessary.” The Commission has not revealed what constitutes “strictly necessary” costs.

Apple could face fines of up to 10% of the company’s total annual worldwide revenue for violating the DMA.

The American tech giant has been in the EU’s crosshairs this year. Regulators slapped Apple with an antitrust fine of 1.8 billion euros ($1.93 billion) in March for abusing its dominant position in the music streaming app distribution market. Piloting rules were also at the center of this investigation.

Apple made big changes to its App Store in the EU this year in anticipation of the DMA. The Cupertino giant now allows downloading apps from websites, as well as third-party app stores on its devices.

But the Commission also raised concerns about some of Apple’s new practices.

Apple still charges a “base technology fee” of 50 cents ($0.54) per installed app for downloads outside of its own App Store. The Commission said it was investigating whether this was consistent with the DMA.

Regulators are also examining whether measures Apple requires users to download from app stores or alternative apps comply with the bloc’s rules.

The Commission will also examine whether “eligibility conditions relating to the possibility of offering alternative application stores or directly distributing web applications to iPhones” also comply with the Technology Act.