Apple makes changes to the App Store

Apple Inc announced changes to its App Store on Thursday after the European Union accused the iPhone maker of violating the bloc’s landmark new digital rules.

The European Union said App Store terms prevented app developers from freely directing consumers to alternative payment methods, making Apple the first tech company ever to face charges of violating the new law, the Digital Markets Act (DMA).

Now, Apple says it will make changes to comply with the DMA and address the findings of the European Commission, the EU’s powerful antitrust regulator.

At the time, Brussels said developers could only lead customers through links in their apps, redirecting users to a web page to enter into any contract.

The regulator said Apple had imposed “multiple restrictions” that meant app developers were unable to communicate, promote offers and sign contracts through the channels of their choice.

Apple said that starting this fall, developers in the EU “can communicate and promote purchase offers wherever they want,” such as through alternative app marketplaces.

But Apple said in its announcement Thursday that the changes mean developers will face a new fee structure for customers who access offers and content through links in their apps.

For example, developers must pay a 5% fee on digital goods and services sold on any platform within one year after a user first installs an app that links to other channels, such as a website.

– Risk of fines –

Tech giants can avoid huge fines if they modify their platforms in line with EU rules. The DMA requires the EU to complete its investigation within a year of opening it.

The committee told AFP it “will assess Apple’s final changes to its compliance measures, taking into account feedback from the market, especially developers”.

The charges against Apple come after the commission launched an investigation into Apple, Facebook owner Meta and Google under the DMA in March.

In July this year, Meta also faced formal charges of violating the DMA.

The DMA outlined for big tech companies what they can and cannot do in their businesses to increase competitiveness in the digital space. For example, they must provide choice screens for web browsers and search engines to give users more choices.

The law gives the EU the power to fine companies up to 10% of their global turnover if they violate the law. For repeat offenders, the fine can be as high as 20%.

If found non-compliant, Apple could also face fines of up to 5% of its average global daily turnover per day.

As of September 2023, Apple’s total revenue for the full year is $383 billion.

The Coalition for App Fairness, which counts Swedish streaming giant Spotify among its members and has long called on Apple to open up its market, refuted Apple’s latest statement.

“By introducing yet another confusing, arbitrary, and expensive fee structure, Apple continues to evade compliance and make Europe’s digital landscape more complex for developers and more expensive for consumers,” the report said.

The fight with Apple

Apple isn’t the only company subject to DMA restrictions. Google parent Alphabet, Amazon, Meta, Microsoft, and TikTok owner ByteDance also have to comply with the DMA.

Online travel giant Booking.com will need to make a decision later this year, while the commission is also assessing whether tech billionaire Elon Musk’s X should also come under the rules.

Even before the DMA came into effect in March this year, Apple’s App Store had been a point of contention with the EU.

In 2020, the European Union fined Apple €1.8 billion ($2 billion) following an investigation launched following a complaint against Spotify that reached a similar conclusion.

Apple has appealed the fine.

The EU is also investigating changes Apple previously allowed third-party app stores to make in order to comply with the DMA.

AFP