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GLBApple Could Face Historic $1 Billion Fine from EU for DMA Non-Compliance
0Article by Filip Radivojevic
Apple is on the brink of facing a substantial fine from the European Union (EU) for allegedly not fully complying with the Digital Markets Act (DMA). This would be the first instance of a company being penalized under this new legislation, aimed at curbing monopolistic practices by large tech companies.
The European Commission is preparing to announce this penalty in the coming weeks, according to a report by the Financial Times. The potential fine could amount to 5% of Apples global revenue, translating to over $1 billion.
In January, Apple announced its plans to comply with the DMA and implemented these changes with the release of iOS 17.4 in March. These updates included significant reductions in App Store commissions, among other modifications. However, the European Commission remains unconvinced that Apple has fully met its obligations.
One major issue highlighted by the Commission is Apple's resistance to allowing app developers to direct users to external offers without incurring fees. This requirement is a fundamental aspect of the DMA, designed to foster competition and reduce the gatekeeping power of major tech companies.
If found in violation of the DMA, Apple could face daily fines equating to 5% of its average daily turnover. This would not only be a financial blow but also a significant operational challenge for the tech giant.
Despite these concerns, Apple has maintained that it is in compliance with the DMA. A company spokesperson stated, Were confident our plan complies with the DMA, and well continue to constructively engage with the European Commission as they conduct their investigations.
Since January, Apple has made several changes to its initial DMA compliance strategy. These include revising app marketplace requirements, adjusting the Core Technology Fee structure, and introducing Web Distribution capabilities. Despite these efforts, the European Commission believes that Apple has not adequately addressed all regulatory expectations.
In response to the DMA, Apple announced a new "Core Technology Fee" in January. This fee requires developers to pay 0.50 for each app installation per year after the first install, applicable to apps distributed via both the App Store and alternative storefronts. This move has been controversial and has contributed to the EU's stance that Apple is not fully compliant with the DMA.
The report, based on information from three individuals familiar with the situation, notes that these findings are preliminary. Apple still has the opportunity to make further changes to avoid the penalty. As this situation develops, it will be crucial to observe how Apple navigates these regulatory challenges and whether it can align its practices with the DMAs stringent requirements.
The outcome of this case will likely set a precedent for how other tech giants will be regulated under the DMA, potentially reshaping the digital marketplace landscape in the EU.
