Months after a case of non-compliance with Apple and the Digital Markets Act (DMA) was raised, the European Commission has shared its preliminary findings with Apple. And the bottom line is that the current App Store rules violate DMA. Confirmed DMA violations may result in fines of up to 10% of annual global sales.
Thierry Breton, the EU's Internal Market Commissioner, said of “I wrote.
In this particular case, the European Commission believes that third-party developers should be able to inform customers of alternative purchase possibilities free of charge.
For example, developers who publish apps on the App Store cannot advertise different prices or alternative distribution channels in their apps. Apple now allows developers to include links to their own sites, but the European Commission believes this linkout mechanism places too many restrictions.
Even if developers redirect users to their website and process the transaction on their website, they must report the transaction to Apple and pay a fee. Apple only waives a 3% payment processing fee for web purchases.
“Apple has made a number of changes to comply with the DMA following feedback from developers and the European Commission,” Apple said in a statement shared with the Financial Times. “We are confident that our plan complies with the law, and we estimate that under the new business terms we have created, more than 99% of developers will pay the same or lower fees to Apple.”
In addition to these preliminary findings, the European Commission will launch a third non-compliance investigation into Apple's new contract terms for EU developers. This time, the committee will focus on Apple's controversial Core Technology Fee (CTF) and alternative app marketplaces.
European developers can keep their standard business terms or choose new business terms that allow them to distribute their apps outside of the App Store. However, these new terms will result in a fee of 0.50 euros per installed app after 1 million downloads.
The company has already adjusted the CTF so that it does not apply to free, non-commercial apps. Additionally, there is a three-year transition period for small developers who launch a hit app and achieve more than 1 million downloads for the first time. But in the long run, it doesn't make much of a difference. Through this new formal investigation, the EC will determine whether the CTF is effectively complying with the DMA.
If you've ever tried to install a third-party app store in the EU, such as AltStore, Setapp Mobile, or Aptoide, you'll notice that it takes quite a few tabs. First, an error occurs in your web browser. You'll need to open the Settings app, accept installing apps from this site, then go back to your web browser to download the alternative store again and accept the pop-up about the risks associated with third-party app stores. The EC investigates this “multi-step user journey” and compliance with DMA rules.
“We are concerned that Apple has designed a new business model that prevents app developers and end users from taking advantage of the opportunities offered by DMA,” Margrethe Vestager, Commission EVP for Competition Policy, said in a speech.
“The content of the DMA is clear. Gatekeepers must allow alternative app stores to establish themselves on their platforms. It allows consumers to get complete information about the offers available to them. “That gives you the freedom to choose where and under what conditions you source your apps,” he added.
In response to today's preliminary findings, Apple can now respond in writing to the European Commission. A final decision is expected to come a year after a formal investigation began, meaning Apple can negotiate with the EU and adjust its business terms once again to avoid hefty fines.
