Following accusations from the European Union that the iPhone manufacturer was violating the bloc’s historic new digital regulations, Apple announced modifications to its App Store on Thursday.
Apple is the first digital company accused of breaking the Digital Markets Act (DMA), a new rule passed by the EU. The EU said that the terms of the software Store prohibited software developers from freely directing users to alternate payment methods.
Apple now states that adjustments will be made to adhere to the DMA and consider the conclusions of the European Commission, the EU’s antitrust solid authority.
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The accusations against Apple
Brussels stated then that developers could only guide users to a web page to complete contracts through a link within their app.
Authorities claimed that Apple had imposed “several restrictions,” which prevented app developers from interacting, promoting offerings, and finalising contracts via the preferred method.
Apple stated that developers in the EU “may communicate and promote offers for purchases” from autumn onwards, wherever they choose—for instance, through a different app store.
However, Apple announced on Thursday that the modifications will result in a new price schedule for developers when users link out of an app to access content and offers.
For example, if users use an app to link to a website or other channel within a year, developers must pay a five per cent tax on digital product and service sales on any platform.
Risk of sanctions
The IT giants can save significant fines by modifying their platforms to comply with EU regulations. The DMA requires that the EU complete any investigation within a year of its commencement.
“We will evaluate Apple’s eventual changes to the compliance measures, also taking into account any feedback from the market, particularly developers,” said the commission.
The commission filed charges against Apple in response to its March DMA investigations into Apple, Google, and Facebook’s parent company, Meta.
In July, Meta was formally accused of breaking the DMA as well.
Do’s and Don’ts for tech companies
To boost competition in the digital space, the DMA provides big tech with a list of what they may and cannot do in business. To provide users with more options, they should provide choice screens for search engines and online browsers.
According to the statute, the EU may sanction businesses up to 10% of worldwide revenue. For repeat offenders, this can increase to up to 20%.
Apple may also be subject to fines of up to 5% of its average daily global revenue if found to be in violation.
Apple’s total revenue was $383 billion in the year ending September 2023.
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Spotify rejects Apple’s modifications
Spotify, the Swedish streaming behemoth, is a member of the Coalition for App Fairness. The group has long demanded that Apple open up its marketplace. The group rejected Apple’s most recent announcement.
It stated, “Apple continues to evade compliance and make the digital landscape in Europe more complicated for developers and more expensive for consumers with the introduction of another confusing, arbitrary, and expensive fee structure.”
Apple legal battle
The DMA is not merely focussing on Apple. The DMA must be complied with by Amazon, Microsoft, TikTok’s owner ByteDance, Google parent Alphabet, and Meta.
Later this year, the commission must assess whether tech tycoon Elon Musk’s X should be subject to the regulations. Booking.com is a central online travel agency.
Even before the DMA went into effect in March of this year, the EU was in dispute over Apple’s App Store.
The European Union fined Apple 1.8 billion euros ($2.0 billion) after a 2020 investigation that began with a Spotify complaint yielded identical results.
Apple filed an appeal to contest the fine.
Additionally, Apple is under investigation by the EU for modifications made in the past to comply with the DMA by permitting third-party app shops.