The European Commission has officially accused Apple of violating the fair competition rules of the Digital Markets Act. Apple has the dubious honor of being the first major technology company to be held accountable under the DMA.

The European Commission accuses Apple of not complying with the rules of the Digital Markets Act (DMA). The fine for this can be up to ten percent of the company’s annual global turnover. The committee’s complaint comes as no surprise: rumors about the action were already circulating in the corridors last week.

To send or not to send

Specifically, the Commission’s preliminary investigation opened earlier found that the rules Apple imposes on its App Store are inconsistent with the DMA. They would prevent developers from freely directing customers to alternative channels where content can be found. The EU has designated Apple as a gatekeeper under the DMA, meaning that the company has such a large influence over a broad ecosystem that it must ensure openness.

The so-called steeringThe rules in the DMA must ensure that the gatekeepers’ ecosystem is sufficiently open and that developers are allowed to use a party’s app store like Apple without restrictions for advertising and redirects to things outside the Apple ecosystem. For example, a music service must be able to freely reference a subscription formula on its own website without owing Apple a commission.

Commission’s vision

The European Commission is concerned about the conditions imposed by Apple on developers. In its preliminary investigation, the Committee found the following facts (emphasis added by the EU):

• None of these terms and conditions allow developers to freely address their customersFor example, developers cannot provide pricing information in the app or otherwise communicate with their customers to promote offers available on alternative sales channels.
• According to most terms and conditions available to app developers, Apple only allows shipping via Link-Outs. This means that app developers can include a link in their app that directs the customer to a web page where the customer can enter into a contract. The link-out process is subject to several restrictions imposed by Apple that prevent app developers from communicating, promoting offers and entering into contracts through the distribution channel of their choice.
• Although Apple may receive compensation for allowing developers to acquire a new customer for the first time through the App Store, this is Amount Apple charges beyond what is absolutely necessary for such compensation. For example, Apple charges developers a fee for each purchase of digital goods or services that a user makes within seven days of clicking on a link in the app.

The European Commission has forwarded its conditional findings to Apple. The investigation is now ongoing and Apple will have an opportunity to defend itself. Apple can examine the EU’s conclusions and contest them in writing with a reasoned response.

Act differently

“Apple’s new slogan would… Act differently should be,” says EU Commissioner for the Internal Market Thierry Breton, referring to the Think differentlymarketing campaign. “Today we are taking further steps to ensure that Apple complies with the DMA rules. We have reason to believe that App Store rules that do not allow app developers to communicate freely with their own users violate the DMA.”

The proceedings officially began on March 25 with the investigation. A final decision will generally be made within twelve months.

The European Commission has now opened a third preliminary investigation into Apple’s practices and its compliance with the DMA, this time focusing on third-party app stores.