Apple may be on the receiving end of a massive fine from the EU over alleged anticompetitive behavior. Originally reported by Bloomberg, it appears that the EU was not sufficiently impressed with Apple’s efforts to allow developers to steer users towards cheaper subscription and purchase options outside of the App Store.
For example, the EU has previously highlighted that Apple charges developers a fee when users click on an outgoing link to purchase a cheaper product or service. This type of fee is dubbed a link-out fee. One such example is an “Initial Acquisition Fee,” which is a 5% commission charged to developers in exchange for Apple serving as the middleman between developers and users. Apple views it as a finders-fee, while critics contend it’s simply Apple trying to get an undeserved cut of revenue that should belong to the developer exclusively.
Put simply, the EU wants Apple to make it easy for developers to communicate alternative pricing to consumers and, in turn, make it easy for consumers to make purchases outside the App Store. Recall, the EU previously said Apple was in non-compliance with the Digital Markets Act (DMA) back in June.
“Today is a very important day for the effective enforcement of the DMA. We have sent preliminary findings to Apple,” Executive Vice-President in charge of competition policy Margrethe Vestager said back in June. “Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.”
Apple’s fine may be massive
There’s no indication how much Apple will be fined. However, the DMA notes that a company can be fined as much as 10% of its annual global revenue. For Apple, that’s a huge amount of money, given that the company raked in $383 billion in revenue in 2023. Notably, the fine can reach up to 20% of global revenue for repeat offenders.
Apple began making sweeping changes to iOS and the App Store earlier this year in response to DMA requirements. These changes include support for third-party App Stores and new avenues for mobile payments. Other changes include the ability to select a non-Safari browser as the default and more expansive data portability options.
Bloomberg relays that the EU may announce the fine before the end of the month.
Meanwhile, it’s no secret that Apple running afoul of EU regulations has hit Apple hard in the pocketbook lately. Recall that Apple just two months ago was ordered to pay $14 billion in unpaid taxes to Ireland. Apple took the hit and still managed to deliver a stellar quarter. Still, Apple certainly doesn’t want to make paying exorbitant fines the norm.
