• Sunday, 21 July 2024

EU targets Apple's App Store as commission launches fresh probe

EU targets Apple's App Store as commission launches fresh probe

Brussels, 24 June 2024 (dpa/MIA) - The European Commission said on Monday it is launching an investigation into alleged anti-competitive practices of Apple's App Store, the third such probe looking into whether the US tech giant is breaking EU rules on the digital market.

"We are concerned Apple's new business model makes it too hard for app developers to operate as alternative marketplaces & reach their end users on iOS," EU competition commissioner Margrethe Vestager said on X. iOS is the operating system for Apple's iPhones.

The commission said it will examine Apple's practice of charging alternative app stores and app developers a fee every time an iPhone user installs their software, a commission statement said.

It is also looking into the steps Apple device users have to go through to use an alternative app store, as well as Apple's eligibility criteria for developers to supply iPhone apps via the web, instead of through the Apple App Store.

EU rules set by Digital Markets Act

The legal basis of the investigation is the European Union's Digital Markets Act (DMA), which regulates the behaviour of digital "gatekeepers," meaning companies that hold powerful, entrenched positions in the EU's digital economy, acting as intermediaries between many users and businesses.

The commission announced that it had sent Apple a "preliminary view" that the company violated the DMA by preventing developers from freely steering users outside Apple's App Store ecosystem, as part of an investigation opened on March 25. The opinion is not final: Apple now has the opportunity to present its defence, and the commission has until March 25 next year to make a final decision.

Also on March 25 this year, the EU executive launched a second investigation into whether Apple is adequately fulfilling its DMA obligation to ask users to choose between alternative defaults for certain apps and services, such as the web browser or search engine.

That makes the new probe announced on Monday the commission's third DMA investigation concerning Apple.

Gatekeepers that fail to comply with their obligations under the DMA can face fines as high as 10% of their global annual revenue. Repeat offenders may be fined up to 20%.

In a statement, Apple said: "Throughout the past several months, Apple has made a number of changes to comply with the DMA."

The company said it is "confident" that its plan complies with the law and that all EU developers can "direct app users to the web to complete purchases at a very competitive rate."

Apple's constraints for third-party app stores

The new investigation concerns three aspects of Apple's terms for third-party app stores and apps.

Until March this year, installing iPhone software from outside the Apple App Store - known as "side-loading" - was not allowed by Apple at all. The DMA forced the company to allow side loading, but only in the EU.

Now the commission is looking at whether Apple's policies for side-loading satisfy the DMA.

The first aspect the commission is examining is the €0.50 ($0.54) fee the company charges the third party stores and developers each time a user installs software from outside the Apple App Store. Apple calls this the "Core Technology Fee," and the commission's statement says it will investigate whether Apple has demonstrated that the fee structure complies with the DMA.

The second element is essentially how cumbersome it is for users to side-load apps: "The Commission will investigate whether the steps that a user has to undertake to successfully complete the download and installation of alternative app stores or apps, as well as
the various information screens displayed by Apple to the user, comply with the DMA," the EU executive's statement said on Monday.

The third is Apple's eligibility requirements for developers to be able to distribute apps through side-loading. The requirements include having "membership of good standing" in the Apple Developer Program, the commission said.

EU Commission: Apple doesn't allow developers to 'steer' customers

Regarding its preliminary view on Apple's steering rules, the commission said the rules "prevent app developers from freely steering customers to alternative channels for offers and content." For example, "developers cannot provide pricing information within the app."

For most developers, their only option is to provide hyperlinks to web pages the commission said.

Furthermore, Apple's fees for helping developers find new customers via the App Store "go beyond what is strictly necessary for such remuneration." For example, Apple charges developers for every digital purchase a user makes within seven days of following a link to an alternative store, the commission said.

MIA file photo