by (Bloomberg) — Apple Inc.’s troubles are in the European Union just getting started, even after being hit with the third largest anti-trust fine ever issued by the bloc.
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This Thursday, the EU is promising a sweeping new law to curb the dominance of Apple and some of the world’s biggest tech firms after years of market dominance the EU has struggled to maintain.
The Digital Markets Act will force the likes of Alphabet Inc.’s Google Search, Apple’s App Store, Amazon.com Inc.’s marketplace. and Facebook Meta Platforms Inc. adhere to a strict list of dos and don’ts – or face the threat of significant fines.
The world’s most ambitious digital regulation is being watched closely by other nations, including Japan, South Korea, Turkey and the United Kingdom, which are considering their own versions.
Under the DMA, it will be illegal for certain platforms to favor their own services over those of competitors. They will be prohibited from combining personal data across their various services, will be prohibited from using data they collect from third-party merchants to compete against them, and will have to allow users to download apps from competing platforms, i among other limitations and obligations.
Apple, fresh from a €1.8 billion ($2 billion) fine for shutting down music streaming rivals, will come under fresh scrutiny after announcing an overhaul of its iOS, Safari and App Store offerings in the EU, which the European Commission. investigate further to determine if they comply with the rules.
Apple and the Commission did not immediately respond to a request for comment.
Read more: Apple Fined EU €1.8 Billion Over Music App Abuse
Fines for breaching these rules can be up to 10% of a company’s total annual global revenue, and up to 20% of global turnover for firms that repeatedly breach the rules. Apple reported revenue of $119.6 billion in the first quarter, including $69.7 billion from the iPhone alone, with sales from the device up 6% from a year ago.
As for the App Store, the Cupertino, California-based company has made efforts to restructure the fees it charges developers since scrapping the 30% commission it historically applied. Still, those changes don’t go far enough for some competitors.
Spotify, which prompted the initial EU complaint about the App Store, said Apple’s DMA proposals were “unacceptable” and “insensitive” and requested a meeting with EU competition chief Margrethe Vestager to discuss Apple’s plans, according to a letter from Spotify’s chief executive, Daniel Ek. seen by Bloomberg News.
Read more: Europe’s Two-Track Approach to Policing Big Tech: QuickTake
“Apple’s App Store fee structure is almost certain to draw scrutiny from the European Commission,” Bloomberg Intelligence analyst Tamlin Bason said. “Spotify and other developers want swift action against Apple.”
Another company expected to face EU scrutiny soon is Meta, whose new pay-or-consent policy to introduce separate, ad-free versions of Facebook and Instagram is likely to draw questions from Brussels regulators. .
Meta made the changes in November to fend off increased regulatory pressure over its processing of users’ personal data, but the subscription-based model could run afoul of the DMA’s new limits on platforms processing personal data for advertising purposes.
Despite the protracted litigation likely to result from the changes, the DMA has already anticipated the impact.
On Tuesday, Google announced that it would link more searches to comparison sites in areas such as flights, hotels and shopping as well as provide more selection screens on Android devices. Meta previously promised that Facebook and Instagram services could be disconnected, and Microsoft Corp. said. that in the future it will be possible to uninstall some programs that are normally bundled with Windows.
Other known platforms are also to face increased scrutiny under the regulation. Last week, accommodation platform Elon Musk’s X and Booking Holdings Inc. indicated to the Brussels-based watchdog that they could meet the DMA’s criteria.
But Big Tech players are also gearing up to challenge the DMA through the bloc’s courts. Apple, Meta, and TikTok are all fighting their designation as “hackers” under the rules.
The owner of TikTok, ByteDance Ltd. last month a court bid to suspend the EU’s decision pending the appeal, forcing the video-sharing app social media platform to comply with DMA.
Ultimately, the outcome of these years of litigation will determine whether the DMA and Vestager’s big gamble succeeds.
“The most significant challenge comes from Apple, because it challenges one of the DMA’s rules, which requires it to give app developers the same ability to use iPhone functions that Apple reserves for itself,” said Zach Myers , assistant director of competition at the office. Center for European Reform. “But even if that case is successful, most of the DMA will still be in place.”
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