Apple Faces EU Deadline to Overhaul App Store Rules or Face Fines

Apple Inc. is facing a critical deadline set by the European Union, which has demanded that the company overhaul its App Store rules by June 26. Failure to comply could result in additional legal action from the EU Commission, which previously fined Apple 500 million euros in April for violating the Digital Markets Act (DMA).

The EU regulators have insisted that Apple allow developers to inform users about cheaper purchasing options outside of the App Store. Apple has resisted this requirement, arguing that the EU is constantly changing the rules. If Apple's proposed changes do not satisfy Brussels, the EU could swiftly impose further penalties under the strict enforcement framework of the DMA.

The April fine was levied due to Apple's contractual restrictions on user redirection, a similar violation that also resulted in a 200 million euro fine for Meta. Apple is also contesting the EU's order to open its iOS system to competing technologies, highlighting the challenging negotiations that "gatekeeper" companies face in adapting to new regulations.

Since September 2023, six major tech giants, including Amazon, Alphabet, and Microsoft, have been subject to the DMA. The law mandates more transparent distribution channels and fairer terms for third-party developers. New allegations could exacerbate Apple's legal and reputational risks, potentially shaking investor confidence and accelerating changes in Europe's app business ecosystem. Investors will closely monitor Apple's submission before the June 26 deadline and the EU Commission's response ahead of the third-quarter earnings report in late October.

Apple is under pressure to quickly address its alleged violations of the EU's Digital Markets Act (DMA). The EU Commission has given Apple until June 26 to comply with its demands, or face another lawsuit. The EU is insisting that Apple allow developers to inform users about cheaper purchasing options outside of the App Store. If Apple fails to meet these requirements, it could face additional fines. However, if Apple can submit a satisfactory plan to address the EU's antitrust concerns, it may avoid further regulatory escalation.

In April, the EU Commission fined Apple 500 million euros for violating the DMA's "anti-steering" obligations. The regulators argued that Apple's contractual terms for alternative app distribution violated the DMA. Meta Platforms, the parent company of Facebook, was also fined 200 million euros for similar violations. Apple has criticized the EU for constantly changing its compliance requirements, stating that the company has invested hundreds of thousands of hours in adapting to the evolving regulations. The EU Commission has not commented on its next steps, but has indicated that it has the regulatory authority to enforce the DMA if Apple continues to violate its terms.

Apple has also challenged a recent EU order to make its iOS operating system more compatible with competing technologies. The EU first designated six major tech companies, including Alphabet, Amazon, Microsoft, and ByteDance, as "gatekeepers" under the DMA in September 2023. These companies are subject to both the DMA and the EU's Digital Services Act (DSA), which aims to regulate and monitor online intermediary services and platforms used by millions of Europeans daily, protecting consumers' online rights.