Apple will reportedly face EU fine under new competition law
Apple is reportedly facing a fine from the European Union, and it could be a hefty one. It’s the first Big Tech company to be slapped with a financial penalty under the EU’s Digital Markets Act, which went into effect last year.
The law, aimed at spurring competition in digital markets, requires Big Tech companies designated as “gatekeepers” to change policies that lock consumers into their products. Like, say, the walled garden of the Apple App Store.
EU regulators ruled that Apple violated the DMA by failing to fully support app developers “steering” consumers to alternative marketplaces. It’s a story Matt Binder, a senior tech reporter for Mashable, has been following. Below is an edited transcript of his conversation with Marketplace’s Meghan McCarty Carino.
Matt Binder: Apple has, among its many App Store rules, one of its rules is this sort of anti-steering rule, where, basically, if you run an app and you sell subscriptions or some other in-app purchase, you technically really can’t push those users to purchase that in-app product or subscription somewhere else. Like for example, it’s one of the major reasons why, actually, Fortnite, the very popular game from Epic Games, is no longer available on the iPhone outside of the EU, because Fortnite tried to send its iPhone users to outside the App Store places to purchase.
And the reason they were doing that was they were offering those purchases for cheaper because they wouldn’t have to pay Apple the percentage that they pay Apple for those in-app purchases, so they’re trying to pass off [those] savings to the consumer as well. And Apple said, you can’t do that. And Epic Games refused to play ball, so Fortnite is not allowed on the App Store anymore in the U.S. It is coming back in the EU because of that other rule, Epic Games created their own app store in the EU, and now they’re able to distribute Fortnite for the iPhone through their alternative app store, where they no longer have to deal with Apple’s official App Store rules.
Meghan McCarty Carino: So earlier this year, Apple did get fined in kind of a related case with Spotify in the EU. The company was fined $2 billion for anticompetitive practices, which is a big number, but for a company with the capitalization of Apple, it’s not a huge number. Do we have a sense of the size of this upcoming fine?
Binder: My assumption is it’ll be around there because that lawsuit with Spotify was actually for the very same thing. It’s just that that Spotify lawsuit hit before the DMA went into effect. So this wasn’t under the DMA rules, but they can get fined basically something like 10% of global turnover, meaning everything Apple makes, 10% of that could be the fine. So we’re talking hundreds of billions of dollars, really. I mean, a lot of money.
McCarty Carino: When we look at another EU tech policy, the [General Data Protection Regulation], the landmark data privacy law that went into effect in 2018, there’s a sense among some critics that that law has not only failed to constrain Big Tech but maybe actually serve to consolidate the biggest companies’ advantages in some ways. How are regulators trying to avoid that scenario with these new laws?
Binder: Well, I would say the DMA is a little bit different because these are substantial fines. So I would say, Apple and other Big Tech companies are definitely looking at the DMA and also the Digital Services Act, another recent set of regulations in the EU. Basically, the DMA is there to make sure that Big Tech companies don’t continue to run these monopolistic platforms, and then the DSA is there to make sure that these Big Tech companies are not ruining society with disinformation and other harmful behaviors.
McCarty Carino: Do you have any sense that what happens in the EU could affect U.S. markets or U.S. consumers at all?
Binder: You definitely see this now with the [Donald] Trump administration coming here in the U.S., with Elon Musk being such an integral part of the Trump campaign, and it seems like he’ll have an integral part in the future administration as well. One of the things being discussed is how the U.S. is going to try to use whatever levers of power, and they certainly have a lot, over the EU to sort of weaken the regulations they’ve been putting on Musk. Elon Musk’s X, formerly Twitter, is facing some hefty fines in the EU under the DSA because of its refusal to rein in misinformation, disinformation and hate speech. And under the DSA wiping your hands clean of that and not taking any countermeasures is against that set of laws. So the question is, will the DSA withstand pressure from the U.S., or will the EU falter to that? And whether that would affect Apple and companies under the DMA as well is another question.
In terms of how this affects the U.S., you could just look at, this didn’t happen under the DMA or DSA because this is another set of EU regulations that have already been instilled, and this happened before the DMA and the DSA. But the reason why Apple finally decided to get rid of its own cable for the iPhone and all of its other devices, and finally switched to the universal method of USB-C, which basically every other device uses, was because of the EU. The EU forced their hand and said, if you don’t make this change, there’s gonna be fines. And so Apple decided it would be easier for them to just make this change across the board. Now, it’s hardware, so that’s a little bit different than software, but still like the reason these newer iPhones and every other Apple device that just came out since has a USB-C cable connection to charge the device is because of the EU.
McCarty Carino: What does a more open Apple App Store look like, at least as envisioned by the European Commission?
Binder: So the App Store can continue to run as it does. But there has to be alternative app stores, like people in the EU right now actually can install other companies’ app stores’ marketplace. Now, Apple does have some requirements. You do need to prove to Apple that you have the funding to be able to run your own app store under their standards, and some of these are even being looked under the DMA to see how much control Apple can even have there. So this is an ongoing process here. But as it stands right now, if you have the ability to show Apple you can run an alternative to the App Store, you can create your own app store, and you could use this app store to distribute your own apps without Apple’s influence, without Apple having to confirm that it’s acceptable to enter the App Store.
And that’s basically what Epic Games has done to release Fortnite once again in the EU. In the EU, if you’re an iPhone user, you can play Fortnite on your iPhone once again, something you haven’t been able to do in about four years. You can’t do that in the U.S., and that’s fully because the EU has these regulations now. The DMA, for example, that forced Apple’s hand to allow companies to take part in the iPhone app ecosystem without having to basically abide by every single one of Apple’s stringent rules to take part in that.
Another tech giant that’s under scrutiny in the EU: Meta. In an attempt to head off regulators there, the company announced this week it will give European consumers the option to see “less personalized ads” on its services like Facebook and Instagram. Meta also said it will slash the price of its ad-free subscription tier for Europeans by 40%.
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