Apple Appeals €5 Billion EU Fine Over App Store Rules

Apple Inc. has filed an appeal against a record €5 billion fine imposed by the European Commission in April. The fine was levied due to Apple's violation of the European Union's digital competition rules, which prohibited developers from guiding customers to cheaper transactions outside of the App Store. Apple contends that the penalty is unprecedented and that the regulatory body's demands for changes to its App Store are illegal.

In its statement, Apple argued that the European Commission is compelling the company to operate its store in a manner that forces developers to accept confusing and detrimental business terms. Apple has complied with these requirements to avoid daily penalties and will present its case to the court. The company has recently adjusted its European App Store policies, asserting that these changes align with the Digital Markets Act (DMA) and will prevent further fines.

The European Commission, acting as the EU's executive arm, announced the penalty in April. It cited that Apple's multiple restrictions prevented app developers from fully benefiting from alternative distribution channels outside the App Store. Additionally, the commission noted that Apple's actions hindered consumers from accessing cheaper alternatives by blocking developers from informing consumers about more affordable options directly.

Apple's appeal underscores the ongoing tension between tech giants and regulatory bodies over market dominance and consumer protection. The outcome of this legal battle could set a precedent for how digital platforms are regulated in the future, potentially impacting other major tech companies operating within the EU.

In June, Apple modified its App Store policies in the EU to comply with local regulations and avoid additional penalties. The changes included a tiered commission structure, where developers pay either 5% or 13% in commissions, along with a 2% user acquisition fee. The specific rates depend on whether developers want their apps to appear in search suggestions, promotional materials, or receive automatic updates.

Apple maintains that the new tiered model was mandated by regulators, causing confusion for both users and developers. The company also pointed out that no other app stores have such a structure. Additionally, Apple has relaxed its rules to allow developers to promote external payment options for digital goods, thereby circumventing some fees. Apple also claims that the European Commission has illegally broadened the definition of "steering," allowing developers to guide users to complete transactions elsewhere in more situations.

These developments are part of Apple's broader global disputes over its App Store. Earlier this year, a judge in California ruled that Apple must allow U.S. developers to freely guide users to complete in-app purchases through web pages, posing a significant revenue risk for the company. Over the years, the EU has imposed several large fines on companies, including over $80 billion on Alphabet's Google and a separate ruling requiring Apple to pay €13 billion in back taxes to Ireland.