The European Commission has announced a critical preliminary finding against Apple, asserting that the company’s App Store rules for music streaming providers are in direct violation of the Digital Markets Act (DMA). This marks a watershed moment as it’s the first time the EU has used its stringent new competition law to target a tech “gatekeeper” with potential financial penalties for non-compliance.
At the heart of the infringement notice are Apple’s “anti-steering” provisions. These rules reportedly prevent app developers from freely directing consumers to alternative, often cheaper, purchasing options outside of the App Store. Furthermore, developers are allegedly restricted from informing users about these alternative avenues within their applications. The Commission’s investigation specifically highlighted how these restrictions disproportionately affect music streaming services, forcing them to adhere to Apple’s payment systems and commission structure, which ultimately can translate to higher costs for consumers.
The DMA, which came into full effect in March, aims to level the playing field by curbing the power of dominant online platforms, designated as “gatekeepers.” Its core principle is to ensure fair and open digital markets, preventing large tech companies from abusing their market position. Apple’s alleged failure to comply with the DMA’s Article 5(4) is particularly concerning to regulators, as it undermines the very essence of fostering fair competition.
Should these preliminary findings be confirmed, Apple faces substantial financial repercussions. The DMA allows for fines of up to 10% of a company’s total global annual revenue, a figure that could escalate to 20% for repeat offenses. Given Apple’s vast global revenue, such a penalty could amount to billions of dollars, serving as a stark warning to other designated gatekeepers.
Apple has been given the opportunity to respond to the Commission’s findings. The company has previously stated its belief in its compliance with the DMA and has made some adjustments to its App Store policies for developers in the EU. However, these changes clearly have not satisfied the European regulators, signaling a tougher stance on Big Tech’s operational practices within the Union.
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