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2 days ago
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Apple's App Store business model is beginning to crumble. A "Cease & Desist" order is forcing the company in the EU to remove controversial rules for app providers by the end of June. This has already happened recently in the US home market. Apple must allow developers and app makers to refer to their own offers in the future; the iPhone company is no longer allowed to collect a high commission. This is the result of the EU Commission's non-compliance decision published on Monday. The regulators had already announced at the end of April that certain App Store rules were in breach of the Digital Markets Act (DMA).
EU: Apple's DMA violations "at least negligent"
The Commission diplomatically described the fact that Apple has practically ignored the requirements of the new EU competition law for over a year as "at least negligent". It has therefore imposed a fine of 500 million euros on Apple. If the company fails to comply with the cease-and-desist order within the deadline, there is also the threat of a recurring penalty payment of an as yet unknown amount.
To comply with the DMA, Apple allowed developers to place links to their own offers last year – , but there are many obstacles in the way. Providers must accept new terms and conditions, are only allowed to place very limited links and must display a warning dialog that is both full-text and deterrent. On top of this, Apple ultimately demands an almost unchanged high – and, in the case of subscriptions, recurring – commission on external purchases that customers make on the web, for example. According to the EU Commission, this approach clearly violates the Digital Markets Act.
So-called core platform services of gatekeepers – including the app store – must allow providers to communicate with their customers "free of charge" and, for example, refer them to their own offers. However, Apple may charge a fee for the "initial acquisition" – but only once, the competition authorities emphasized. The company itself would have to work out how such remuneration could be structured.
External purchases in the US app store
In the USA, the judge in the major antitrust dispute between Epic Games and Apple recently forced the iPhone company to make precisely this opening. Large and small providers alike immediately took advantage of the new opportunities: Amazon now sells e-books in the Kindle app, Spotify links to its subscription offers and even Fortnite is back in the App Store – along with a web shopping option, which Epic used five years ago to provoke Apple's expulsion.
Apple has thus lost a central part of the control over its App Store business model: rules such as the link ban ensured for a long time that as many app providers as possible used the company's prescribed in-app purchase interface. Apple automatically retains up to 30 percent commission for the digital content purchased via this interface. The company warns of billions in losses and is fighting against both decisions and has already lodged an appeal in the USA. The company also intends to challenge the EU decision, which Apple described as "unfair".
(lbe)
