Title: Apple Faces Potential Fine for Breaching EU Laws - What Does This Mean for Investors?
24 June 2024
By Imran Rahman-Jones, Technology reporter
Image Source: Getty Images
European Union regulators have accused Apple of violating new laws designed to regulate big tech companies, marking the first violation of the Digital Markets Act (DMA). Apple's App Store has been accused of stifling competition by squeezing out rival marketplaces. The company could face a fine of up to 10% of its global revenue if it fails to comply with the rules.
Apple has the opportunity to review the preliminary findings of the investigation and avoid the hefty fine by coming up with a satisfactory proposal. The European Commission emphasizes that developers should have the freedom to inform customers about cheaper app stores beyond Apple's ecosystem.
The tech giant charges developers an average of 30% commission on its App Store, which the Commission deems excessive. Apple has been previously instructed to allow alternatives in the EU back in March. EU Commissioner Thierry Breton stated that the App Store rules prohibiting developers from freely communicating with their users may violate the DMA.
In response, Apple claims to have made recent changes to ensure compliance with the DMA. The company asserts that over 99% of developers would pay the same or less in fees under the new terms. Apple argues that users benefit from enhanced security measures on the official App Store, while the Commission is open to discussing security concerns.
Additionally, the European Commission has initiated another investigation into Apple's new contractual terms for developers. The focus areas include a fee for app downloads outside the App Store, the steps required for users to download apps from alternative stores, and the eligibility criteria for alternative app store developers.
Apple maintains that it has adjusted its eligibility criteria and waived the fee for apps that generate no revenue. These developments could have significant implications for Apple's financial performance and investor sentiment. It is essential for investors to monitor how Apple navigates these regulatory challenges to make informed decisions about their investments in the company.