Months after filing charges against Apple for non-compliance with the Digital Markets Act (DMA), the European Commission has reported its preliminary findings to Apple. The conclusion is that the current App Store rules violate the DMA. If found to be in violation of the DMA, fines of up to 10% of annual global turnover could be imposed.
“'Act differently' should be their new slogan,” EU Internal Market Commissioner Thierry Breton wrote to X. “For too long, Apple has shut out innovative companies and denied consumers new opportunities and choices.”
In this particular case, the Commission considers that third-party developers should be able to inform their customers of alternative purchase possibilities free of charge.
For example, developers who release apps on the App Store cannot advertise different prices or alternative distribution channels within the app. Apple currently allows developers to include a link to their site, but the European Commission believes this link-out mechanism is too restrictive.
If a developer redirects the user to their own website and processes the transaction on their own website, they still must report the transaction to Apple and pay a fee. Apple only waives its 3% payment processing fee for web purchases.
“Apple has made several changes to comply with the DMA in response to feedback from developers and the European Commission,” the company said in a statement. “We are confident that our plans comply with the law, and we estimate that under the new terms we have created, more than 99 percent of developers will pay the same or lower fees to Apple.”
In addition to these preliminary findings, the European Commission is also opening a third non-compliance investigation into Apple's new contract terms with EU developers. This time, the Commission will focus on Apple's controversial Core Technology Fee (CTF) and alternative app marketplaces.
European developers can choose to keep the standard business terms or opt for new terms that allow them to distribute their apps outside of the App Store, but with a fee of €0.50 per installed app after 1 million downloads.
The company has already adjusted the CTF so that it doesn't apply to free, non-commercial apps, and there's a three-year transition period for small developers who release a hit app that gets more than a million downloads for the first time, but in the long run not much will change. With this new formal investigation, the EC will determine whether the CTF is effectively compliant with the DMA.
If you've ever tried to install a third-party app store like AltStore, Setapp Mobile, or Aptoide in the EU, you may have noticed that it requires quite a few taps. First, your web browser will show you an error. You have to open the Settings app, allow the installation of the app from this site, go back to your web browser, re-download the alternative store, and allow a pop-up about the risks associated with third-party app stores. The EC will review this “multi-step user journey” and its compliance with DMA rules.
“We are concerned that Apple has designed a new business model that prevents app developers and end users from taking advantage of the opportunities offered by the DMA,” Margrethe Vestager, the European Commission's vice-president in charge of competition policy, said in a speech.
“The DMA's language is clear: gatekeepers must allow alternative app stores to be established on their platforms and ensure that consumers are fully informed about the offers available to them so that they are free to choose from where and on what terms they obtain apps,” she added.
Today's preliminary findings now allow Apple to respond in writing to the European Commission, with a final decision expected one year after the formal investigation begins, meaning Apple can negotiate with the EU to renegotiate the terms of its deal and avoid huge fines.