European Union regulators on Monday said Apple is in breach of sweeping new tech rules because it does not allow customers of its App Store to be steered to alternatives.
The European Commission, the E.U.’s executive arm, also said it had opened a new probe into Apple over new contractual terms with developers.
The E.U. opened an investigation into Apple, Alphabet and Meta in March under a landmark new law known as the Digital Markets Act, or DMA, which aims to reel in the power of Big Tech firms. So-called anti-steering rules were one of the big areas of focus of the probe. Under the DMA, tech firms are not allowed to block businesses from telling their users about cheaper options for their products or about subscriptions outside of an app store.
On Monday, regulators said in their preliminary findings that Apple was in breach of the DMA because its App Store rules “prevent app developers from freely steering consumers to alternative channels for offers and content.”
Apple allows steering only through a system where app developers can provide a link that sends users to a webpage where they can then purchase content, such as a subscription, according to the commission. However, this process is “subject to several restrictions imposed by Apple that prevent app developers from communicating, promoting offers and concluding contracts through the distribution channel of their choice,” the commission noted.
The regulators also said the fees Apple charges developers for the initial acquisition of new customers via the App Store “go beyond what is strictly necessary.”
In response, Apple said it believes the changes it has made in the E.U. comply with the DMA.
“We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created,” Apple said in a statement on Monday.
“All developers doing business in the E.U. on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate.”
Apple could face fines of up to 10% of the company’s total worldwide annual turnover, if it is found in breach of the DMA.
The U.S. tech giant has been in the E.U.’s crosshairs recently. Regulators hit Apple with a 1.8 billion euro ($1.93 billion) antitrust fine in March, alleging it abused its dominant position in the market for the distribution of music streaming apps. The steering rules were also a focus in that investigation.
Apple made some big changes to its App Store in the E.U. this year in anticipation of the DMA. The Cupertino giant now allows apps to be downloaded from websites, as well as third-party app stores on its devices.
But the commission also raised concerns about some of Apple’s new practices.
Apple still charges a “core technology fee” of 50 euro cents ($0.54) per app installed for downloads outside its own App Store. The commission said it is looking into whether this complies with the DMA.
Regulators are also looking at whether the steps Apple makes users take to download alternative app stores or apps comply with the bloc’s rules.
The commission will also look at whether “eligibility requirements related to the ability to offer alternative app stores or directly distribute apps from the web on iPhones” is in compliance with the tech law.