By Dan Moren
March 25, 2024 7:01 AM PT
EC investigates Apple and other tech gatekeepers over DMA compliance
Europe’s Digital Markets Act continues to be the gift that keeps on giving—a gift Apple probably wishes it could return. The European Commission today announced that it was opening a slew of investigations into big tech companies over their non-compliance with the DMA, including Alphabet, Meta, and Apple.
Apple, in particular, has found itself in the crosshairs for three different areas. First, that the company may have put too many restrictions on developers who want to steer customers outside of the App Store. (Apple recently relaxed those rules, including ditching mandatory design templates.)
Secondly, in the area of user choice, the EC is concerned Apple has not done enough to allow users to choose what software is installed on their phone. That includes the ability to uninstall built-in apps, change default app settings, and provide screens allowing users to choose between alternatives. The EC’s announcement particularly calls out the browser choice screen, though it doesn’t specifically details its concerns beyond saying it “may be preventing users from truly exercising their choice of services within the Apple ecosystem.” The screen currently shows up when users first launch Safari on iOS and provides a list of the eleven most popular browsers in the region, in random order. However, Apple does impose some restrictions on what it takes to be included in that list, including a requirement that the app has been downloaded 5000 times in the EU over the past calendar year.
Finally, and perhaps most contentiously, the EC says that it is investigating the fee structure of Apple’s new business model in the EU, saying that it “may be defeating the purpose of its obligations under Article 6(4) of the DMA.” That decision was hinted at this past week by Margrethe Vestager, the executive vice president in charge of competition policy, when she said in an interview with Reuters “if the new Apple fee structure will de facto not make it in any way attractive to use the benefits of the DMA. That kind of thing is what we will be investigating.” This also comes on the heels of an EU-Apple workshop about the DMA last week, during which developer and AltStore proprietor Riley Testut asked Apple representatives how they would protect creators of free apps if those apps went viral, putting them on the hook for Apple’s new Core Technology Fee. Apple’s Kyle Andeer said the company was likewise concerned and that it was “something we’re working on,” though no further information has been provided.
These investigations aren’t going to be speedy: the EC says they will be concluded within 12 months, at which point the body will tell the companies what changes if any need to be made. The companies may also be subject to fines of up to 10 percent of annual global revenue, or 20 percent in cases of “repeated infringement.”
Apple, for its part, said in a statement provided to several outlets, including The Verge: “We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations.”
Dan’s take
The DMA and the EC are clearly proving to be a thorn in Apple’s side. Despite the company trying to get ahead of these kinds of issues, apparently its attempts to do the minimum needed to comply weren’t quite enough. The specific issues over anti-steering policies and user choice are certainly annoyances, but seem like issues that can be tweaked by Apple without serious impacts to the company.
But the big risk here is the investigation into the fee structure. Big companies like Meta and Spotify seem unlikely to ever have used Apple’s new business terms as proposed: they would go from paying Apple nothing under the current App Store terms to paying Apple quite a bit—a scenario that Apple wins either way. While those companies might want more control over the distribution and monetization of their apps, they’re not going to do so at the literal expense of millions of euros. Likewise, while small developers might find the new terms comparatively more attractive, especially for types of apps that will never get approved by Apple, the risk of “hitting it big” and triggering the CTF could likewise be too high. And though Apple opened up the avenue for web distribution, the strictures it put on place as to who is allowed to use the feature—such as a calendar year threshold of one million downloads—certainly limits a lot of small developers. While that last isn’t specifically mentioned by the EC, I have a hard time imagining it’s not part of the overall investigation into the fee structure.
The real challenge for Apple will be in trying to figure out what changes it can make in the near term to both avoid the heavy end of the EC’s hammer and dodge further pitfalls along the way. Gee, sure is tough when your business is entirely subject to the whims of a seemingly capricious organization who won’t tell you exactly what rules you need to follow, isn’t it?
[Dan Moren is the East Coast Bureau Chief of Six Colors. You can find him on Mastodon at @dmoren@zeppelin.flights or reach him by email at dan@sixcolors.com. His latest novel, the supernatural detective story All Souls Lost, is out now.]
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