In this illustration, the Apple logo is displayed on a smartphone with the European Union flag in the background.
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European Union regulators said Monday that Apple is violating sweeping new technology rules because it does not allow customers of its App Store to be directed to alternatives.
The European Commission, the EU's executive arm, said it had opened a new investigation into Apple regarding new contractual terms with developers.
The European Union opened an investigation into Apple, Alphabet and Meta in March under a landmark new law known as the Digital Markets Act (DMA), which aims to restore the power of big technology companies. So-called anti-routing rules were one of the large areas of focus of the investigation. Under the DMA, technology companies are not allowed to prevent companies from telling their users about cheaper options for their products or about subscriptions outside of the App Store.
On Monday, regulators said in their preliminary findings that Apple violated the DMA because its App Store rules “prevent app developers from freely directing consumers to alternative channels for offers and content.”
CNBC has reached out to Apple for comment.
Apple only allows routing through a system where app developers can provide a link that sends users to a web page where they can then purchase content, such as a subscription, according to the commission. However, the committee noted that this process is “subject to numerous restrictions imposed by Apple that prevent app developers from communicating, promoting offers, and entering into contracts through the distribution channel of their choice.”
Regulators also said the fees Apple charges developers for the initial acquisition of new customers through the App Store “exceed what is strictly necessary.” The committee did not disclose the “absolutely necessary” fees.
Apple could face fines of up to 10% of its annual worldwide sales if it is found to be in violation of the DMA.
The American technology giant was in the crosshairs of the European Union this year. Regulators fined Apple 1.8 billion euros ($1.93 billion) in March for abusing its dominant market position to distribute music streaming apps. Routing rules were also a focus of this investigation.
The European Union opens another investigation into the DMA
Apple has made some big changes to its App Store in the EU this year in anticipation of the DMA. The Cupertino giant now allows apps to be downloaded from websites, as well as third-party app stores on its devices.
But the committee also raised concerns about some of Apple's new practices.
Apple still charges a “core technology fee” of 50 euro cents ($0.54) per app installed for download outside its App Store. The Commission said it was examining whether this was compatible with the DMA.
Regulators are also looking into whether the steps Apple takes for users to take to download App Stores or alternative apps comply with the bloc's rules.
The Commission will also consider whether “eligibility requirements relating to the ability to offer alternative app stores or distribute applications directly from the web on iPhones” also comply with the Technology Act.
