Monday, July 15, 2024

EU Finds Apple’s App Store Violates Digital Markets Act, Launches New Investigations

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  • The EU’s preliminary findings state Apple’s App Store rules violate the Digital Markets Act.
  • Developers face restrictions on advertising alternative purchasing options within apps.
  • Apple could face fines and must negotiate terms to comply with the law.

Apple’s App Store is in hot water with the European Union (EU) for breaching the Digital Markets Act (DMA). The European Commission, after a few months of investigating, has shared its preliminary findings and the verdict isn’t looking good for Apple.

The current rules in the App Store are not meeting the standards set by the DMA, and Apple could be facing fines that could go up to 10% of their global annual turnover.

Thierry Breton, the EU’s internal market commissioner, didn’t hold back on his criticism. He even suggested on social media that Apple should change its slogan to “Act different,” accusing the tech giant of stifling innovation and limiting consumer choices.

The main issue at hand is that third-party developers aren’t allowed to inform their customers about alternative purchasing options directly within their apps.

Apple has made some changes, like allowing developers to link to their own websites, but the European Commission thinks these changes are not enough.

Currently, even when developers manage transactions on their websites, they still have to report these transactions to Apple and pay a commission.

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While Apple waives a 3% payment processing fee for web purchases, the Commission believes the restrictions are still too tight.

Apple, on the other hand, insists that they are working to comply with the DMA. In a statement, the company mentioned that they’ve made several changes based on feedback from developers and the European Commission.

Apple believes that more than 99% of developers would end up paying the same or even less in fees under the new business terms they’ve introduced.

Adding to the heat, the European Commission is also opening another investigation into Apple’s new terms for developers in the EU. This investigation will look into the Core Technology Fee (CTF) and the rules surrounding alternative app marketplaces.

Under the new terms, developers can either stick with the standard terms or choose new ones that let them distribute their apps outside the App Store. However, choosing the new terms means paying a €0.50 fee per installed app after the first million downloads.

Apple has already tweaked the CTF so that it doesn’t apply to free, non-commercial apps. They’ve also introduced a three-year transition period for small developers who experience a sudden surge in downloads. But these changes are just temporary relief.

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The European Commission wants to ensure that these fees comply with the DMA in the long run.

Users trying to install third-party app stores like AltStore, Setapp Mobile, or Aptoide in the EU have to jump through several hoops.

This involves dealing with error messages, changing settings to allow installations from unknown sources, and dealing with multiple warnings about the risks of third-party app stores.

The Commission will investigate if this complex process is in line with DMA requirements.

Margrethe Vestager, the Commission’s EVP in charge of competition policy, expressed her concerns. She believes Apple’s new business model is designed to discourage both developers and users from utilizing the opportunities provided by the DMA.

Vestager emphasized that the DMA is clear about gatekeepers like Apple allowing alternative app stores to flourish on their platforms.

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Consumers should have complete information about the options available to them to make informed choices about where to get their apps and under what conditions.

Now, Apple has the chance to respond to the European Commission’s findings in writing. The final decision is expected one year after the formal investigation began, giving Apple time to negotiate and adjust its business practices to avoid hefty fines.

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Emily Parker
Emily Parker
Emily Parker is a seasoned tech consultant with a proven track record of delivering innovative solutions to clients across various industries. With a deep understanding of emerging technologies and their practical applications, Emily excels in guiding businesses through digital transformation initiatives. Her expertise lies in leveraging data analytics, cloud computing, and cybersecurity to optimize processes, drive efficiency, and enhance overall business performance. Known for her strategic vision and collaborative approach, Emily works closely with stakeholders to identify opportunities and implement tailored solutions that meet the unique needs of each organization. As a trusted advisor, she is committed to staying ahead of industry trends and empowering clients to embrace technological advancements for sustainable growth.

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