A few months after launching a non-compliance case against Apple and the Digital Markets Act (DMA), the European Commission has given Apple its preliminary findings. And the bottom line is that the current App Store rules violate DMA. Confirmed violations of the DMA can result in fines of up to 10% of worldwide annual turnover.
‘Do different’ should be their new slogan,” EU Internal Market Commissioner Thierry Breton wrote on X. “For too long, Apple has pushed out innovative companies – denying consumers new opportunities and choices.”
In this particular case, the European Commission believes that third-party developers should be able to inform customers about alternative purchase options – free of charge.
For example, developers who have released apps on the App Store cannot advertise different prices or alternative distribution channels in their apps. While Apple now allows developers to include a link on their site, the European Commission believes that this linking mechanism has too many restrictions.
Even if developers redirect users to their websites and process transactions on their websites, they must report the transactions to Apple and pay a commission. Apple only waives the 3% payment processing fee for online purchases.
“Apple has made a number of changes to comply with DMA in response to feedback from developers and the European Commission,” the company said in a statement. “We are confident that our plan complies with the law and estimate that more than 99% of developers would pay Apple the same or less fees under the new business terms we have created.”
In addition to these preliminary findings, the European Commission is launching a third investigation into Apple’s new terms of service for EU developers. This time, the Commission will focus on Apple’s controversial Core Technology Fee (CTF) and alternative app marketplaces.
European developers can stay on the standard terms of business or choose new terms of business that allow them to distribute their apps outside of the App Store. However, these new terms lead to a fee of €0.50 per installed app after one million downloads.
The company has already modified the CTF to not apply to free, non-commercial apps. There is also a three-year grace period for small developers who release a hit app and get more than one million downloads for the first time. However, this does not change much in the long run. With this new formal investigation, the EC will determine whether the CTF is effectively complying with the DMA.
If you’ve tried to install a third-party app store in the EU like AltStore, Setapp Mobile or Aptoide, you may have noticed that it takes quite a few taps. First, an error will appear in the web browser. You must open the Settings app, accept app installations from this site, return to your web browser, re-download the alternative store, and accept pop-ups about the risks associated with the third-party app store. EC will review this “multi-step user journey” and its compliance with DMA rules.
“We are concerned that Apple has designed its new business model to discourage app developers and end-users from taking advantage of the opportunities DMA provides,” said Margrethe Vestager, the Commission’s EVP in charge of competition policy.
“The DMA letter is clear: gatekeepers must allow alternative app stores to take up residence on their platforms; and that consumers are fully informed about the offers available to them. So that they can freely choose where they want to get their applications and under what conditions,” she added.
As for today’s preliminary findings, Apple can now respond to the European Commission in writing. The final decision will come a year after a formal investigation began, meaning Apple can negotiate with the EU and adjust its business terms once more to avoid a hefty fine.