Apple announced the App Store changes on Thursday after the European Union accused the iPhone maker of violating the bloc's groundbreaking new digital rules.
The EU said App Store rules meant app developers were unable to freely direct consumers to alternative payment methods, making Apple the first technology company to be accused of breaching new legislation known as the Digital Markets Act (DMA).
Now Apple says it is making the changes to comply with the DMA and address the findings of the European Commission, the EU's powerful antitrust regulator.
Brussels said at the time that developers could only direct customers through in-app links that redirect users to a web page to conclude the contract.
The regulator said Apple had imposed “several restrictions” that prevented app developers from communicating, promoting offers or entering into contracts through channels of their choice.
Starting in the fall, Apple said EU developers will be able to “communicate and advertise offers to purchase” anywhere, including through alternative app marketplaces.
But in its announcement on Thursday, Apple said the changes mean developers will have new fee structures for linking customers to offers or content outside of their apps.
For example, developers will be required to pay a 5 percent commission on sales of digital goods and services made across all platforms within one year of a user's first installation of an app that has the ability to link to another channel, such as a website.
Risk of fines
The DMA has called on the EU to complete its investigation within a year of its launch, and big tech companies could avoid hefty fines if they fix their platforms in line with EU rules.
“We will evaluate any final changes to Apple's compliance measures, taking into account feedback from the market, in particular from developers,” the committee told AFP.
The charges against Apple come after the Commission launched investigations into Apple, Facebook's parent company Meta and Google under the DMA in March.
Meta also faced formal charges of violating the DMA in July.
To increase competition in the digital sphere, the DMA has given big tech companies a list of what businesses can and cannot do – for example, they must provide choice screens in web browsers and search engines to give users more choice.
The law gives the EU the power to impose fines of up to 10 percent of a company's global turnover, with fines increasing to up to 20 percent for repeat offenders.
Apple could also be subject to fines of up to 5% of its average daily global revenue if found in violation.
Apple's total revenue for the year ending September 2023 is $383 billion.
The App Fairness Coalition, which includes Swedish streaming giant Spotify and other groups and has long called on Apple to open up its marketplace, rejected Apple's latest announcement.
“By introducing increasingly confusing, arbitrary and expensive fee structures, Apple continues to avoid compliance and make the European digital environment more complicated for developers and more costly for consumers,” the company said.
The fight with Apple
Apple isn't the only company subject to the DMA: Google parent Alphabet, Amazon, Meta, Microsoft and TikTok owner ByteDance must also comply with the DMA.
Online travel giant Booking.com is due to be subject to regulation later this year, and the European Commission is also considering whether tech billionaire Elon Musk's X should also be subject to regulation.
Apple's App Store has been a bone of contention with the EU even before the DMA came into effect in March this year.
The EU fined Apple 1.8 billion euros ($2 billion) after a similar finding in an investigation launched in response to a complaint from Spotify in 2020.
Apple appealed the fine.
The EU is also investigating changes Apple previously made to comply with the DMA by allowing third-party app stores.
Recommended Newsletter: The Fortune Next to Lead newsletter is a must-read for the next generation of C-level leaders. Every Monday, this newsletter provides the strategies, resources, and expert insight you need to earn the most coveted position in the business world. Subscribe now.
Source link
