Regulators take closer aim at Apple
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Europe's decision to move forward against Apple for violations of its new tech competition law highlights a shift toward tighter regulation of the iPhone maker.
Why it matters: Despite being one of the world's largest companies and controlling a vast, tightly integrated platform, Apple has largely managed to avoid regulators' crosshairs.
Driving the news: The European Commission said Monday that it had reached a preliminary determination that Apple's App Store rules hinder developers from directing consumers to other ways of buying products and getting content outside of Apple's marketplace — a requirement under the Digital Markets Act that went into effect in March.
- Apple is the first of the big tech companies accused of violating the new ruling, though regulators have been investigating others, including Meta, Google and Amazon, for potentially abusing their position as "gatekeepers" under the DMA.
- Europe's competition authority also opened an investigation into whether Apple's technology fee for third-party developers violates the sweeping new law.
The big picture: Europe's case comes amid a broader crackdown on Apple and its business practices.
- In March, the Justice Department and more than a dozen states sued Apple, arguing that the company's actions and policies violate antitrust law by making it harder for customers to access rival products and services.
- Other countries, such as South Korea, have attempted to limit Apple's dominance through laws that require it and Google to permit rival in-app payment systems.
What they're saying: "The developers' community and consumers are eager to offer alternatives to the App Store," European Union executive VP Margrethe Vestager said in a statement. "We will investigate to ensure Apple does not undermine these efforts."
The other side: Apple, for its part, says it has taken several actions designed to comply with EU regulation.
- "We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created," Apple said.
- "All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate," the company added.
Between the lines: Apple, meanwhile, appears to be taking a multipronged approach in response to tighter European regulation.
- On the one hand, Apple has changed its policies in an effort to follow at least the letter of the law. In January, Apple announced its approach for allowing developers to deliver apps to European consumers, making further tweaks in March and May that it said were aimed at addressing concerns from developers.
- At the same time, Apple said last week that it was holding off bringing several upcoming features — including Apple Intelligence — to Europe amid regulatory uncertainty. Apple is also withholding a likely-to-be-popular feature that allows iPhone owners to control their device from a Mac.
What's next: Apple will be able to contest the ruling, with a final determination due by March 2025, according to an EU press release.
- If Apple is found to be in non-compliance, it could be fined up to 10% of its global revenue. This could go up to 20% for repeated infringements, the commission said.
