Apple faces first fine under EU Digital Markets Act as App Store antitrust conflict escalates
Apple Inc. may face its first fine from the European Union under the Digital Markets Act for failing to allow app developers to direct users to purchase cheaper products and services outside the App Store. This penalty marks an escalation in the conflict between Apple and regulators. The fine could be as high as 10% of global annual sales and may be accompanied by periodic fines. Despite facing regulatory pressure, Apple's stock price has risen 16% this year
According to Zhitong Finance APP, Apple Inc. (AAPL.US) may face its first fine from the European Union under the new digital antitrust rules—the Digital Markets Act (DMA)—for failing to allow app developers to direct users to purchase cheaper products and services outside the App Store. This penalty marks an escalation in the conflict between Apple and regulators regarding its dominance in the app store. Previously, Apple was fined €1.8 billion (approximately $2 billion) for violating EU competition rules related to the music streaming service Spotify.
According to informed sources, while the European Commission may impose the fine before the current competition commissioner Margrethe Vestager leaves office, it could also be delayed until later this year. The fine may be accompanied by periodic penalties until Apple complies with the law, and the decision is still being drafted. Neither Apple nor the European Commission has commented on this matter.
Earlier, Apple received a warning in June that it must provide developers with effective means to guide users away from its app store, or face penalties. Unlike traditional antitrust laws, the DMA aims to prevent anti-competitive behavior to avoid market disruption.
Under this law, EU regulators have the authority to impose fines of up to 10% of the global annual sales of the world's most powerful tech companies, with repeated violations potentially reaching 20%, or impose periodic fines of up to 5% of average daily revenue.
Apple's latest fourth-quarter financial report showed that the company's sales reached $94.9 billion, exceeding market expectations of $94.4 billion. iPhone revenue was $46.2 billion, higher than the market expectation of $45 billion. Despite facing regulatory pressure, Apple's stock price has risen 16% this year.
Vestager has had multiple disputes with Apple during her tenure, including accusations that Apple prevents competitors from informing users about cheaper offers outside the App Store, and making headlines for demanding that Apple repay Ireland €13 billion in alleged unfair tax benefits.
Additionally, EU antitrust regulators have also forced Apple to allow third parties to use the iPhone's payment chip to process transactions, enabling banks and other services to compete with Apple Pay