EU Tightens Scrutiny on Apple Over Digital Markets Act Compliance

The European Union (EU) is ramping up its regulatory actions against Apple to ensure that the tech giant complies with the Digital Markets Act (DMA). The move comes after persistent concerns about Apple’s business practices, which EU officials claim have stifled innovation and limited consumer choice. According to the EU the Digital Markets Act Compliance level must be satisfactory.

EU Commissioner’s Strong Criticism

On June 24, Thierry Breton, the EU Internal Market Commissioner, expressed strong criticism of Apple on the X platform. He accused the company of “squeezing out innovative companies and depriving consumers of new opportunities and choices for a long time.” Breton’s remarks underscore the EU’s commitment to enforcing compliance with its stringent digital market regulations.

Digital Markets Act and Compliance Issues

The Digital Markets Act, a cornerstone of the EU’s strategy to regulate major tech companies, aims to ensure fair competition and consumer rights within the digital economy. Under the DMA, companies like Apple are required to allow third-party app stores on their devices and eliminate restrictive fees that hinder competition.

Earlier this month, EU Competition Commissioner Margrethe Vestager highlighted the significant challenges Apple faces in aligning with the DMA. In an interview with foreign media, Vestager described the issues as “many very serious” and pointed out that Apple’s recent measures fall short of DMA requirements.

Investigation into Apple’s Practices

The European Commission initiated an investigation into Apple’s compliance with the DMA in March. The investigation focuses on whether Apple’s market adjustments meet the new regulatory standards, particularly concerning the provision of third-party app stores. The DMA mandates that developers should be able to offer their apps without incurring exorbitant fees.

Apple’s response included deploying adjustments in the iOS 17.4 update. However, these changes have not satisfied EU regulators. A critical point of contention is Apple’s imposition of a “core technology fee” of 0.50 euros for each new download after an app has been installed more than one million times in a year. This fee, according to Vestager, does not align with DMA requirements.

Regulatory Backlash and Future Implications

Vestager’s recent interview emphasized the severity of the compliance issues, stating, “During our investigation, we found that there are many problems with Apple’s new rules, and the problems are very serious. These problems are shocking, the severity exceeds our expectations, and are obviously non-compliant.” Such strong language indicates the EU’s deep dissatisfaction with regards to Apple. It also indicates the potential for significant regulatory actions against the company.

Moreover, Apple’s announcement last Friday adds another layer of complexity. The company revealed that due to regulatory issues, several features—Apple Intelligence, iPhone Mirroring, and SharePlay screen sharing—will be unavailable to EU users when iOS 18 and macOS Sequoia are released this fall. This development signals potential disruptions for Apple users in the EU. It also highlights the broader impact of regulatory compliance on product features.

Apple’s perspective on the Digital Markets Act

Apple’s perspective on the Digital Markets Act (DMA) is a blend of cautious compliance and strategic adaptation. Apple has publicly stated its commitment to complying with the DMA, emphasizing that it aims to meet the legal requirements while maintaining the user experience and security standards its customers expect. At a hearing, Apple’s attorney states that the company follows both legal compliance and its long-standing values, prioritizing the user experience even as it opens its ecosystem to more competition.

Apple’s compliance strategy includes reducing App Store commissions from 30% to a range of 10-17%, depending on the payment method used. This reduction should help developers retain more revenue, potentially fueling further innovation and development within the EU market.

Conclusion

The escalating regulatory scrutiny from the EU reflects a broader effort to ensure that tech giants like Apple operate within fair and competitive frameworks. As the EU continues to enforce the Digital Markets Act Compliance, Apple may need to make more substantial adjustments to its business practices to comply with European regulations fully. The unfolding situation underscores the ongoing tension between major tech companies and regulatory bodies striving to protect consumer interests and promote innovation.