Apple at odds with EU as new digital markets act kicks in
Apple Inc.’s troubles in the European Union (EU) are just beginning, even after it was hit with the third largest antitrust fine ever doled out by the bloc.
This Thursday, the EU is betting that a new sweeping law will rein in the excesses of Apple and some of the world’s most dominant tech firms after decades of market dominance that the bloc struggled to contain.
The Digital Markets Act will force the likes of Alphabet Inc.’s Google Search, Apple’s App Store, Amazon.com Inc.’s marketplace and Meta Platforms Inc.’s Facebook to heed a strict list of do’s and don’ts— or face the threat of significant fines.
The world’s most ambitious digital regulation is being closely watched by other nations, including Japan, South Korea, Turkey and the UK, which are contemplating their own versions.
Under the DMA, it will be illegal for certain platforms to favour their own services over those of rivals. They’ll be barred from combining personal data across their different services, prohibited from using data they collect from third-party merchants to compete against them, and will have to allow users to download apps from rival platforms, among other limits and obligations.
Apple, fresh from its €1.8 billion fine for shutting out music streaming rivals from its App Store, will come under fresh scrutiny after it announced an overhaul of its iOS, Safari and App Store offerings in the EU, which the European Commission is likely to investigate further to determine whether they fall in line with the rules.
Neither Apple nor the commission immediately responded to a request for comment.
Fines for violating these rules can amount up to 10% of a company’s total annual worldwide revenue, and up to 20% of global turnover for firms who repeatedly flout the rules. Apple reported revenue of $119.6 billion in the first quarter, including $69.7 billion from the iPhone alone, with sales from the device up 6% from a year ago.
When it comes to the App Store, the Cupertino, California-based firm has made efforts to restructure the fees it charges developers since it scrapped the 30% commission it has historically imposed. Still, those changes don’t go far enough for some competitors.
Spotify, which triggered the initial EU complaint over the App Store, said Apple’s DMA proposals were “unacceptable” and “nonsensical” and requested a meeting with the EU’s competition chief Margrethe Vestager to discuss Apple’s plans, according to a letter from Spotify chief Daniel Ek seen by Bloomberg News.
“Apple’s App Store fee structure is almost certain to draw scrutiny from the European Commission,” said Bloomberg Intelligence analyst Tamlin Bason. “Spotify and other developers are already asking that swift action be taken against Apple.”
Another company expected to face early EU scrutiny is Meta, with its new pay-or-consent policy to introduce separate, ad-free versions of Facebook and Instagram likely to get questions from Brussels regulators. Meta made the changes in November to ward off growing regulatory pressure over its processing of users’ personal data, but the subscription-based model could rub up against the DMA’s new limits on platforms to process personal data for advertising purposes.
Despite what will likely be lengthy litigation that comes out of the changes, the DMA has already started to have the intended impact. Other wellknown platforms are set to face growing scrutiny under the regulation too.
Under the DMA, it will be illegal for certain platforms to favour their own services over those of rivals