Apple, Meta, and Google may face legal repercussions in Europe due to their efforts to adhere to the language, if not the exact spirit, of the bloc’s recently enacted Digital Markets Act (DMA).
Central to the investigation are worries that Apple and Google’s parent company, Alphabet, have not provided enough permission for “app developers to “steer” consumers to offers outside the gatekeepers’ app stores, free of charge,” as stated by the European Commission (the executive arm of the European Union). Right now, these digital giants’ new regulations could “constrain… developers’ ability to freely communicate and promote offers and directly conclude contracts, including by imposing various charges.”
The European Commission said it also believes Alphabet’s search may still engage in self-preferencing of Google-owned services, like Google Flights. Apple, it said, may not be allowing users meaningful choice in selecting alternatives to default iOS services or preferences — the ability to uninstall any pre-loaded app, for instance. Also caught up in the probe is Meta, in relation to its new EU scheme wherein users can opt out of ads, but only for a price.
The European Commission had, in the lead up to these probes, been hinting at a possible investigation into Apple and Google. In January, Apple announced a raft of App Store changes to comply with the DMA, which required it to (among other things) enable alternative app marketplaces on iOS in the EU and to let developers direct users to third-party payment systems. Included in Apple’s updates was a new “core technology fee” of €0.50 that developers will have to pay per user per year after the first 1 million installs of an app — even if a user downloads the software from a third-party marketplace. Google is also charging developers fees in the EU if they bypass the Play Store.
Many of Apple’s rivals slammed the App Store changes. Some criticized the company’s fees for third-party payments in the US too.
The EU, perhaps unsurprisingly, is keeping a close eye on how companies subject to DMA rules are complying (or not) with them. “There are things that we take a keen interest in, for instance, if the new Apple fee structure will de facto not make it in any way attractive to use the benefits of the DMA,” antitrust chief Margrethe Vestager told Reuters on March 19. “That kind of thing is what we will be investigating.”
Today’s announcement also hints that Apple’s “new fee structure” for alternative app stores may still be on the docket for future intervention, along with, apparently, Amazon‘s possible self-preferencing in its digital storefront.
In statements to press Apple has said it’s “confident our plan complies with the DMA” while Alphabet has said it will “continue to defend our approach in the coming months.” A Meta spokesperson called its paid, ad-free option “a well-established business model across many industries.”
News of the sweeping probe comes soon after the US Justice Department filed an antitrust lawsuit against Apple. The government and more than a dozen states accused Apple of fostering a mobile app monopoly, claiming the company makes it too difficult for rivals to compete with its own products and services.
It might be a while before we learn the outcome of the EU probes. According to Bloomberg, EC investigators try to reach a final decision within a year of starting a formal investigation. If officials determine that these companies aren’t complying with the DMA, they face hefty penalties.
Under the law, the EU can fine a company up to 10 percent of its total annual revenue, and up to 20 percent for repeated violations. Such penalties could make the $2 billion that the EU recently fined Apple for allegedly suppressing iTunes and Apple Music competitors like Spotify look like pocket change.
