Apple is in breach of EU's DMA, faces a humongous fine

Apple is in breach of the European Union's Digital Markets Act (DMA), the European Commission has decided in a preliminary finding.

On Monday, the Commission also opened a new case against Apple over concerns that its new contractual requirements for third-party app developers and app stores are also in breach of the DMA.

SEE ALSO: Apple delays AI features in Europe because of DMA regulations

The DMA, which entered into force in Nov. 2022, requires companies with app platforms operating in the EU to enable third-party app developers to inform their customers of alternative, cheaper purchasing options, as well as steer them to those offers and allow them to make purchases.

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During its investigation, the Commission looked at Apple's App Store practices and found that it doesn't allow developers to "freely steer their customers" away from the App Store. The company instead permits third-party apps to direct users through links within their apps, which the Commission finds to be too restrictive. It also said the fees that Apple charges developers for acquiring new customers "go beyond what is strictly necessary."

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"For too long, Apple has been squeezing out innovative companies — denying consumers new opportunities & choices," European Commissioner Thierry Breton tweeted on Monday. "Today we are taking further steps to ensure AppStore & iOS comply with #DMA."

Apple now has 12 months (counting from March 25, 2024, when the proceedings commenced) to comply, or otherwise face a fine that can be as high as 10 percent of Apple's global revenue (roughly $38 billion per Apple's recent earnings), or up to 20 percent in case of repeated infringements. The EU fined Apple $1.84 billion for similar anti-steering practices in March 2024, following a Spotify lawsuit.

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Last week, Apple announced it would not launch its upcoming Apple Intelligence features in Europe due to the requirements set forth in DMA.

Apple isn't the only company the European Commission is investigating for DMA violations. The EU's regulator is also looking into the business practices of Google and Meta.