Apple’s regulatory cloud thickens

Apple’s (AAPL) legal troubles intensified Monday with news that European Union regulators found it was violating a new law designed to rein in tech giants.

The EU’s European Commission said it informed Apple that rules for Apple’s lucrative App Store violated the Digital Markets Act by illegally preventing software developers from telling customers how to access content outside the App Store.

The regulator also announced that it had opened a separate investigation into Apple’s practice of charging a “basic technology fees” for iOS apps available in the EU.

The increased overseas scrutiny comes as Apple defends itself in the United States against antitrust charges from the U.S. Department of Justice and 16 state attorneys general. They sued Apple in March, alleging the company used illegal tactics to maintain a monopoly in the smartphone market.

Apple fights US lawsuit; he has not yet commented on the EU’s new actions.

Investors shrugged off the news, sending Apple stock up more than 1%.

The law that the EU claims Apple violated took effect in March. It targets six major tech companies that the EU considers “gatekeepers” – Apple, Amazon (AMZN), Alphabet (GOOG, GOOGL), ByteDance, Microsoft (MSFT) and Meta (META) – and imposes more restrictive rules in competition matters.

The aim of the law is to prevent the most dominant technology companies from preventing their smaller competitors from accessing certain markets.

Apple is the first tech giant to receive a complaint from the EC alleging a violation of the DMA.

The DMA allows Apple to charge developers a fee for new customers who sign up through the App Store.

However, the law prevents Apple from preventing developers from disclosing alternative ways to purchase their content.

And that’s what regulators said Apple did.

The Apple logo is illuminated at a store in Munich, Germany, in 2020. (AP Photo/Matthias Schrader) (ASSOCIATED PRESS)

“Under the DMA, developers distributing their applications through the Apple App Store should be able, free of charge, to inform their customers of other, less expensive purchasing options, direct them to these offers and allow them to make purchases “, the commission said in a statement. explaining his conclusions.

Violations of the DMA carry serious consequences, potentially amounting to up to 10% of a company’s global annual revenue. In the case of Apple, global revenues reached $383 billion in 2023.

Apple does not separate App Store revenue in its financial filings. However, its growing services category, which includes store revenue, reached $85 billion in the same year.

The EC announcement the significantly expanded financial risks Apple faces from global antitrust regulators.

The commission said it had undertaken another investigation to determine whether Apple’s fees, which charge developers 0.50 euros for app downloads exceeding 1 million, constitute a violation of the DMA.

And earlier this year, the EC revealed a fine against Apple for another lawsuit filed on antitrust grounds.

The case, which was…

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