Apple accused of unfair App Store fees

Apple is accused of using its dominant market position to exploit app developers, according to a preliminary finding by the European Commission.

An investigation has been launched into whether the iPhone developer may be breaking EU competition laws, by preventing developers from “steering” customers to better deals while charging them prohibitive listing fees. Combined with previous similar violations, this violation could result in a fine of nearly $80 billion for the company.

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The European Commission has informed Apple that it considers its App Store rules to be in breach of the Digital Markets Act, adopted by the European Parliament in September 2022.

The Digital Markets Act, which the Commission describes as “one of the centerpieces of the European digital strategy”, establishes a set of criteria to ensure contestability in the online sphere and prevent the act of “control” of the share of dominant technology companies.

Apple allegedly violated this law by preventing app developers from “directing” consumers to alternative channels for content.

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According to the commission’s press release issued Monday, Apple’s App Store rules mean that “developers cannot provide in-app pricing information or otherwise communicate with their customers to promote offers available on alternative distribution channels.

Margrethe Vestager, Executive Vice-President of the European Commission in charge of competition policy, said: “Steering is essential to ensure that app developers are less dependent on gatekeepers’ app stores and that consumers are informed of the best offers. »

Additionally, Apple is accused of offering app developers excessively high SEO fees in exchange for making it easier for them to acquire new customers.

While Apple is entitled to receive remuneration for connecting developers with paying users, the European Commission said: “the fees charged by Apple go beyond what is strictly necessary for such remuneration.”

The commission’s preliminary findings follow an investigation into the company’s governing rules in March and mean Apple has until March 2025 to defend itself in writing before the commission makes a final decision not to compliance.

If Apple’s App Store rules are found to violate the DMA, the European Commission said it could impose a fine of “up to 10% of the controller’s total global turnover access”.

In the event of repeated violations, this penalty could reach 20% of the company’s total revenue, which, based on the $383 billion in sales made during its last fiscal year, could cost Apple just under $80 billion.

Newsweek contacted Apple’s press team via email about the investigation.

The new investigation follows a decision in March by the European Commission to fine the tech giant for “abuse of a dominant position” in the music streaming market.

Apple was fined €1.80 for violating EU anti-steering rules after it “applied restrictions on app developers preventing them from informing iOS users about subscription services to alternative and cheaper music available outside the app.

The commission found that Apple’s behavior, which lasted nearly a decade, “may have led many iOS users to pay significantly higher prices for music streaming subscriptions.”

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