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Apple Charged with Breaching EU Tech Rules, Faces Another Probe

European Union antitrust regulators have charged Apple (NASDAQ:AAPL) with breaching the bloc’s technology rules, a violation that could lead to a substantial fine for the tech giant. Additionally, Apple is under investigation for new fees imposed on app developers.

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The European Commission, the EU’s antitrust and technology regulator, announced on Monday that it had sent preliminary findings to Apple following an investigation initiated in March. This charge marks the first application of the Commission’s landmark Digital Markets Act (DMA), which aims to curb the dominance of Big Tech and create a level playing field for smaller competitors. The Commission has until March next year to issue a final decision. Breaching the DMA can result in a fine of up to 10% of a company’s global annual turnover.

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EU antitrust chief Margrethe Vestager highlighted issues with Apple’s new terms, stating they fall short of DMA compliance. Apple has the opportunity to avoid a fine by modifying its business practices to address these concerns. “As they stand, we think that these new terms do not allow app developers to communicate freely with their end users and to conclude contracts with them,” Vestager said at a conference. She emphasized that it is Apple’s responsibility to determine how to comply with the DMA.

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Apple responded, noting that it has made several changes in recent months to align with the DMA after receiving feedback from app developers and the Commission. “As we have done routinely, we will continue to listen and engage with the European Commission,” Apple said in an email.

The Commission criticized Apple’s practice of allowing “steering” only through ‘link-outs,’ meaning app developers can include a link in their app that redirects customers to a web page to conclude a contract. Additionally, the Commission took issue with the fees Apple charges for facilitating the initial acquisition of new customers via the App Store, suggesting these fees exceed what is necessary for remuneration.

Apple defended its approach, stating, “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.”

The EU executive has also launched an investigation into Apple’s new contractual requirements for third-party app developers and app stores. This probe will assess whether these requirements are necessary and proportionate. The focus includes Apple’s core technology fee, the multi-step user journey to download and install alternative app stores on iPhones, and the eligibility requirements for developers to offer alternative app stores or directly distribute apps from the web on iPhones.

The new fees, introduced by Apple in March in the EU, include a core technology fee charged to major app developers, even if they do not use any of Apple’s payment services. This move has drawn criticism from companies like “Fortnite” creator Epic Games and others.

Vestager also criticized Apple’s recent announcement to delay the launch of its AI-powered features in the EU, which the company attributed to the DMA. Vestager suggested that Apple’s implication that its AI integration might be anti-competitive could be a misinterpretation of the DMA’s objectives.

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