The European Commission Opens Another Investigation into Apple. The Goal: To See if iOS Is Complying With New Laws

  • “Our preliminary position is that Apple does not fully allow steering,” Competition commissioner Margrethe Vestager said.

  • In addition, the EC has launched a second investigation to see whether the Core Technology Fee and Apple’s requirements comply with the DMA.

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The European Commission has recently released a report on its investigation into Apple’s App Store rules. Additionally, the EC has announced a new investigation to determine if the recent iOS update that allows users to use alternative app marketplaces complies with the rules established by the Digital Markets Act, or DMA.

What the Commission found: First, the EC determined that the terms of Apple’s App Store restrict developers “from freely steering consumers,” so much so that they “cannot provide pricing information within the app or communicate in any other way with their customers to promote offers available on alternative distribution channels.”

The Commission claims that Apple only permits referrals through links, but this process is subject to “several restrictions.” Furthermore, the EC states that “fees charged by Apple go beyond what is strictly necessary.” Apple charges a fee for facilitating initial customer acquisition through the App Store. This means that if a user downloads the app from the App Store but makes a purchase outside through an outbound link, the company charges a fee for facilitating that transaction.

Preliminary conclusions. The EC released preliminary conclusions on Monday and informed Apple about its findings. Apple now has the opportunity to defend itself and respond to the Commission’s opinions. If these conclusions are confirmed, Apple would be violating the DMA. However, it should be noted that this investigation doesn’t determine the final outcome, and it’s up to Apple to take action.

This process is expected to take a considerable amount of time, according to Margrethe Vestager, the bloc's competition commissioner:

“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.”

A new investigation. As if that weren’t enough, the EC has initiated a third investigation against Apple regarding its new contractual terms for developers. It’s worth noting that Apple has been forced to allow third-party stores and alternative distribution methods. The Commission is now examining whether these recent measures comply with the law.

This is what Vestager had to say in this regard:

“We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and sideloading. The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts.”
Apple 1 Setapp, one of the first App Store alternatives for iOS.

Three main areas. The Commission’s investigation will focus on three main areas: the Core Technology Fee, the process for downloading and installing third-party stores and apps, and the eligibility requirements for developers.

Although Apple was forced to support third-party stores, developers who use these stores and launch their apps through them must pay €0.50 (about $0.54) for each app installed after 1 million installs, with some exceptions. Apple states that this fee reflects the value developers receive from the company’s tools and platform. Now, the EC aims to investigate whether these new terms comply with the DMA.

On the other hand, an investigation will determine whether the process of installing third-party apps complies with the law. The team at Xataka On tested it and found it to be excessively long and tedious, with too many steps. In fact, the process appears to be designed to discourage users, and as a result, the Commission will not only investigate the process itself but also the information displayed on the screen during the process.

The third aspect under scrutiny is developers’ eligibility to offer third-party app stores and distribute apps over the web on iPhones. One requirement is to have been a member “of good standing” of the Apple Developer Program for two consecutive years or more and to have had an app with more than one million first annual installs on iOS in the EU in the previous calendar year.

And there’s more. As detailed in its recent press release, the EC “will continue undertaking preliminary investigative steps” outside of this third investigation regarding Apple’s “checks and reviews” of third-party apps and stores. Although the company led by Tim Cook doesn’t analyze third-party apps the same way it does the App Store, it does conduct a notarization process to ensure the app meets certain standards.

Apple’s position. We’ve contacted Apple regarding this issue. This was its response:

“In response to feedback from developers and the European Commission, Apple has made several changes over the past few months to comply with the Digital Markets Act (DMA). We are confident that our plan complies with the law. We estimate that more than 99% of developers would pay the same or lower fees to Apple under the new commercial terms we have created. All developers operating in the EU on the App Store have the option to use the features we have introduced, including the ability to direct app users to the web to make purchases at very competitive prices. We will continue to listen to and engage with the European Commission as we regularly do.”

Image | Xataka

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