A few months after opening proceedings against Apple for non-compliance with the Digital Markets Act (DMA), the European Commission has shared its preliminary findings with Apple. And the conclusion is that the current App Store rules violate the DMA. Confirmed violations of the DMA can lead to fines of up to 10% of annual global turnover.
“‘Act different’ should be their new slogan,” wrote EU Internal Market Commissioner Thierry Breton on X. “For too long, Apple has crowded out innovative companies and denied consumers new opportunities and choices.”
In this specific case, the European Commission believes that third-party developers should be able to inform customers about alternative purchasing options – free of charge.
For example, developers who have published apps in the App Store are not allowed to advertise different prices or alternative sales channels in their apps. Although Apple now allows developers to include a link to their website, the European Commission believes that this link-out mechanism entails too many restrictions.
Even if developers redirect users to their websites and process transactions on their sites, they must report transactions to Apple and pay a commission. Apple only waives a 3% payment processing fee for online purchases.
“Apple has made a number of 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 plan complies with the law and estimate that more than 99% of developers would pay the same or less fees to Apple under the new terms and conditions we created.”
In addition to these preliminary findings, the European Commission is opening a third investigation into non-compliance with Apple’s new contract terms for EU developers. This time, the Commission will focus on Apple’s controversial Core Technology Fee (CTF) and alternative app marketplaces.
European developers can keep the standard terms and conditions or choose new terms and conditions that allow them to distribute their apps outside the App Store. However, these new terms will result in a fee of €0.50 per installed app after one million downloads.
The company has already adjusted the CTF so that it does not apply to free, non-commercial apps. There is also a three-year transition period for small developers who release a successful app and achieve more than a million downloads for the first time. However, in the long term, this does not change much. With this new formal investigation, the EU Commission will determine whether the CTF is indeed compatible with the DMA.
If you’ve tried to install a third-party app store in the EU, such as AltStore, Setapp Mobile or Aptoide, you may have noticed that it takes a few clicks to do so. First, you’ll see an error message in your web browser. You’ll need to open the Settings app, accept app installations from that site, return to your web browser, re-download the alternative store, and accept pop-ups about the risks associated with a third-party app store. The EU will be looking into this “multi-step user journey” and its compliance with the DMA rules.
“We are concerned that Apple has designed its new business model in a way that prevents app developers and end users from taking advantage of the opportunities offered to them by the DMA,” said Margrethe Vestager, the Commission’s vice-president in charge of competition policy, in a speech.
“The wording of the DMA is clear: Gatekeepers must allow alternative app stores to establish themselves on their platforms and ensure that consumers are fully informed about the offers available to them so that they can freely choose where and under what conditions they want to obtain their apps,” she added.
As for today’s preliminary findings, Apple can now respond in writing to the European Commission. The final decision is expected one year after the formal investigation was opened, meaning Apple can negotiate with the EU and adjust its terms and conditions once again to avoid a large fine.