Apple Faces EU Deadline Over App Store Policies

Apple Inc. is once again facing scrutiny from the European Union's antitrust regulators. The iPhone maker is under renewed legal pressure for alleged breaches of the Digital Markets Act (DMA), a comprehensive new law aimed at the world’s largest tech firms. Apple is close to receiving another formal charge sheet if it does not resolve concerns over its App Store policies, particularly the practice of prohibiting app developers from informing customers about cheaper alternatives or subscription plans outside the App Store, known as “anti-steering.”

The European Commission, the EU’s executive branch, has set a deadline of June 26 for Apple to develop concrete proposals to bring its arrangements in line with international standards. Regulators have indicated that they are prepared to levy daily fines of up to 5% of Apple’s average daily worldwide turnover if the iPhone maker does not comply. The DMA is designed to apply strict rules on big digital platforms with significant market positions, including Apple, Google, Meta, Amazon, Microsoft, and ByteDance, the parent company of TikTok. These provisions become effective on March 1, 2024.

While the EU has not confirmed the next steps, officials with knowledge of the discussions say the Commission is becoming increasingly impatient with Apple’s response and is ready to act quickly if required. Apple, on the other hand, has pushed back against changing rules, stating that it has been working hard to follow the regulations. A spokesman for Apple expressed frustration with what the company views as vague and wavering expectations from EU regulators. “The goalposts keep moving,” Apple said in a statement, adding that it is being asked to comply with shifting interpretations of the DMA. The company claims it has invested hundreds of thousands of hours of engineering time to comply with the regulations.

Apple has also cautioned that the EU’s requirements would undermine innovation and user privacy. The company contends that requiring it to turn over its tightly controlled ecosystem would make devices less secure and violate intellectual property laws. Apple argues that offering developers the ability to lead people to an alternative payment method could degrade the quality and security of the user experience, which it insists it spends great effort ensuring is of good quality.

Apple’s troubles in Europe reflect a wider regulatory crackdown on Big Tech. The European Commission has stepped up enforcement with new antitrust rules and tighter oversight of digital platforms, including social media influencers and gaming debates, now falling under the scope of the updated Digital Markets Act. Hours after Apple was fined €500 million in April, Meta Platforms Inc., the company behind Facebook and Instagram, was slapped with a €200 million penalty for not giving users a real choice to personalized ads based on its “pay or consent” model. That case was also related to DMA violations.

Over the last decade, the EU has hit Google with more than $8 billion in fines for various competition law violations, including search bias and the bundling of mobile apps. Apple, meanwhile, is still fighting a €13 billion tax order handed down in 2016 after the Commission alleged that the company received illegal state aid from Ireland. Among other rulings, the Commission has ordered Amazon to change how it treats third-party sellers, directing Apple to open its tap-to-pay chip to rival wallets. It also opened a continuing investigation into whether Microsoft’s bundling of Teams into Office is unfair to rivals.

With the June 26 deadline looming, Apple is poised at a critical juncture: Offer an olive branch that pleases Brussels, or suffer additional legal and financial pain. The outcome of this regulatory battle will not only impact Apple but also set a precedent for how other tech giants navigate the evolving landscape of digital market regulations in the EU.