Apple And Euro Laws: Who's In Charge?

Apple has been found to breach EU laws, specifically those designed to allow smaller companies to compete and allow consumers to find cheaper alternatives in the tech giant's app store. The European Commission has opened a non-compliance procedure against Apple, giving the company 12 months to comply before facing fines of up to 10% of its global revenue. This is not the first time Apple has been in hot water with the EU, with the company losing an EU tax case and being warned about 'interoperability' compliance. The EU's laws do apply to Apple, and the company has made changes to its App Store, Safari, and iOS features in the European Union to comply with the Digital Markets Act (DMA).

Apple's compliance with the EU's Digital Markets Act

Apple has been designated as a gatekeeper under the EU's Digital Markets Act (DMA) in relation to iOS, the App Store, and Safari. The DMA sets out a list of obligations and prohibitions for Apple to abide by.

Apple has made a series of changes to comply with the DMA, including allowing app developers to distribute their iPhone apps directly to consumers outside of the App Store and within the European Union. Apple has also announced that users of iPhones and iPads in the 27-nation bloc will be able to use alternative app stores to download games, productivity tools, and other apps. Banks and shopping services can now offer competing payment methods inside their apps.

In response to the DMA, Apple has also made it possible for people who buy new iPhones to see a new menu for downloading alternative browsers to Safari, such as Chrome and Firefox. These changes are a result of a 2022 law passed by the European Union called the Digital Markets Act, which was aimed at loosening the power of the world's largest tech companies in areas like e-commerce, social media, and messaging.

Apple has stated that it is confident that its plan complies with the law, and that more than 99% of developers would pay the same or less in fees under the new business terms. The company has also said that it will continue to listen and engage with the European Commission and investigators.

Apple's status as a gatekeeper under the DMA

Apple, along with Meta and ByteDance, has challenged its designation as a "gatekeeper" under the EU's Digital Markets Act (DMA). The DMA is a regulation that seeks to ensure fair competition between large tech companies and smaller market players in the digital sector across the EU.

On 6 September 2023, the European Commission designated six companies, including Apple, as gatekeepers under the DMA. A total of 22 core platform services provided by these gatekeepers were identified. Apple's core platform services include its operating systems (iOS, iPadOS, macOS, watchOS, and tvOS), App Store, and Safari.

Apple contests the classification of its core platform services and is seeking to segregate their functionalities. Apple argues that each version of its operating systems serves distinct purposes for both end users and business users. With regard to iMessage, Apple challenges its designation as a core platform service, arguing that it is not tailored for business-to-consumer communication and does not meet the criteria outlined in Article 3(1)(b) of the DMA.

The company has lodged a legal appeal, arguing for the re-classification of its core platform services. Apple's appeal highlights the complexity involved in defining and categorising tech platforms, particularly considering their rapidly evolving business models. The outcome of Apple's legal challenge could significantly influence the EU's digital regulatory framework and shape the pan-European tech landscape.

Consumer protection laws

Apple, like any other company operating in Europe, must comply with European consumer protection laws. These laws are designed to protect consumers' rights and ensure fair competition in the market. In the case of Apple, consumer protection laws ensure that consumers have access to alternative app stores, browsers, and payment methods, rather than being restricted to Apple's own ecosystem.

In Europe, consumer protection laws are enforced by the European Commission, which also acts as the EU's antitrust and technology regulator. In 2024, the European Commission found Apple to be in breach of new EU laws, specifically the Digital Markets Act (DMA), which is designed to allow smaller companies to compete and give consumers more choices. The Commission accused Apple of preventing app developers from steering consumers to alternative channels, thus restricting competition. Apple was given 12 months to comply with the DMA before facing potential fines.

In other European countries, such as Germany, EU consumer law provides a six-year warranty for products purchased within the EU. This means that consumers can claim a repair or replacement for defective products within six years of purchase. However, it is important to note that this is not a replacement for the standard warranty provided by Apple but rather an additional protection for consumers.

Overall, European consumer protection laws play a crucial role in ensuring that companies like Apple comply with regulations, promote fair competition, and protect the rights of consumers. These laws give consumers the right to seek repairs, replacements, or refunds for defective products, and they also ensure that consumers have access to a variety of choices in the market, promoting innovation and competition.

Apple's App Store changes in the EU

Apple has made changes to its App Store in the European Union to comply with the Digital Markets Act (DMA), a 2022 law aimed at loosening the power of large tech companies. The changes include:

• Allowing users to download apps from alternative app stores.
• Enabling developers to opt out of using Apple's in-app payment system, which charges commissions of up to 30%.
• Giving users the ability to choose their default web browsers and contactless payment apps.
• Introducing a "core technology fee" of 50 euro cents per user account per year, which Apple states only applies to developers who opt into the new business terms.

These changes are a result of a European Union competition law that took effect on March 7, 2024. They represent a significant shift in Apple's control over the App Store, which it introduced in 2008.

While Apple maintains that these changes comply with the DMA, critics argue that the company's fee structure remains unfair and that the changes may not go far enough to meet the requirements of the legislation. The European Commission has opened a non-compliance procedure against Apple, and the company has 12 months to comply before facing fines of up to 10% of its global revenue.

EU investigations into Apple's non-compliance

The European Union has launched several investigations into Apple's non-compliance with the Digital Markets Act (DMA), which came into force in 2023. The DMA is a set of laws designed to curb the market power of big tech companies and ensure fairness and competition in the digital marketplace. The European Commission, which acts as the EU's antitrust and technology regulator, has opened multiple non-compliance investigations against Apple, including:

• App Store steering rules: The investigation focuses on whether Apple allows developers to "steer" users away from its App Store to alternative channels and cheaper options, as required by Article 5(4) of the DMA. The Commission is concerned that Apple's measures, including various restrictions and charges, may not be fully compliant with the DMA.
• Browser choice screen: The Commission is investigating whether Apple's design of the web browser choice screen prevents users from easily selecting an alternative default browser or search engine on their iPhones, in contravention of Article 6(3) of the DMA.
• Fee structure: The Commission is examining Apple's new fee structure, including the "core technology fee" of 0.50 euros charged for every app installation after the first million. The EU has expressed concern that these fees may be excessive and could deter alternative app stores.
• Uninstalling apps and changing default settings: The investigation relates to whether Apple allows users to easily uninstall iOS apps and change default settings, as required by the DMA.

These investigations, which began in March 2024, have a timeframe of 12 months for regulators to finish their inquiries. If Apple is found to be in non-compliance with the DMA, it could face significant fines of up to 10% of its annual global revenue, or approximately $38 billion based on its 2023 revenue. Repeat infringements could result in fines of up to 20%.

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