European Commission provides update on investigations into Apple under Digital Markets Act

June 28, 2024

European Commission provides update on investigations into Apple under Digital Markets Act

Along with other big tech companies, Apple was designated as a gatekeeper under the Digital Markets Act and was required to fully comply with all DMA obligations by 7 March 2024.

The European Commission has informed Apple that it believes that its App Store rules breach the DMA as they prevent app developers from directing consumers to alternative channels for offers and content.

In addition, the Commission is now investigating Apple over separate concerns that its new contractual requirements for third-party app developers and app stores, including Apple’s new “Core Technology Fee”, fall short of ensuring effective compliance with Apple’s obligations under the DMA.

Preliminary findings on Apple’s steering rules for the App Store

Under the DMA, developers distributing their apps via Apple’s App Store should be able, free of charge, to inform their customers about alternative cheaper purchasing options, direct or “steer” them to those offers and allow them to make purchases.

Apple currently has three sets of business terms governing its relationship with app developers. The Commission’s preliminary findings are:

  • Apple’s terms do not permit developers to freely steer their customers. For example, developers cannot provide pricing information within the app or communicate in any other way with their customers to promote offers available on alternative distribution channels.
  • Under most of the business terms available to app developers, Apple allows steering only through “link-outs”, that is, app developers can include a link in their app that redirects the customer to a web page where the customer can conclude a contract. The link-out process is subject to several restrictions imposed by Apple that prevent app developers from communicating, promoting offers and concluding contracts through the distribution channel of their choice.
  • Although Apple is permitted to receive a fee for facilitating the initial acquisition of a new customer by developers via the App store, the fees charged by Apple go beyond what is strictly necessary for such remuneration. For example, Apple charges developers a fee for every purchase of digital goods or services a user makes within seven days after a link-out from the app.

The Commission therefore takes a preliminary view that Apple is in breach of the DMA. This is without prejudice to the outcome of the investigation. Apple can now respond to the Commission’s preliminary findings.

If the Commission’s preliminary views were to be ultimately confirmed, none of Apple’s three sets of business terms would comply with Article 5(4) of the DMA, which requires gatekeepers to allow app developers to steer consumers to offers outside the gatekeepers’ app stores, free of charge. The Commission would then adopt a non-compliance decision by 25 March 2025.

New non-compliance investigation into Apple’s contract terms

In addition, the Commission is investigating Apple’s new contractual terms for developers as a condition to access some of the new features enabled by the DMA, notably the provision of alternative app stores or the offering an app via an alternative distribution channel. Currently, Apple does not allow alternative distribution channels at all.

The Commission will investigate whether these new contractual requirements for third-party app developers and app stores breach Article 6(4) of the DMA including its necessity and proportionality requirements.  This includes:

  • Apple’s Core Technology Fee, under which developers of third-party app stores and third-party apps must pay a €0.50 fee per installed app. The Commission will investigate whether Apple has demonstrated that the fee structure that it has imposed, as part of the new business terms, and particularly the Core Technology Fee, effectively complies with the DMA.
  • Apple’s multi-step user journey to download and install alternative app stores or apps on iPhones. The Commission will investigate whether the steps that a user must undertake to successfully complete the download and installation of alternative app stores or apps, as well as the various information screens displayed by Apple to the user, comply with the DMA.
  • The eligibility requirements for developers related to the ability to offer alternative app stores or directly distribute apps from the web on iPhones. The Commission will investigate whether these requirements, such as the ‘membership of good standing’ in the Apple Developer Program, that app developers must meet to be able to benefit from alternative distribution comply with the DMA.

In parallel, the Commission will continue investigating the checks and reviews put in place by Apple to validate apps and alternative app stores to be sideloaded.