Apple Found in Breach of DMA

Lisa O’Carroll (via Hacker News, New York Times, Slashdot):

Apple has been found to be in breach of sweeping new EU laws designed to allow smaller companies to compete and allow consumers to find cheaper and alternative apps in the tech business’s app store.

The European Commission, which also acts as the EU antitrust and technology regulator, said it had sent its preliminary findings to Apple after an investigation launched in March.

[…]

The company has 12 months to comply before it face fines of up to 10% of its global revenues but the EU hopes ongoing dialogue will lead to compliance rather than sanctions.

Margrethe Vestager (tweet):

Because the ball is now in the gatekeepers’ court. They have to convince us that the measures they take will achieve full compliance with the DMA. And where this is not the case, we will intervene. Within a month of the compliance deadline, we opened no less than five non-compliance cases. Today, we are opening a sixth one: we will look into Apple’s new business model: the commercial terms Apple imposes on app developers who want to reach end users on the iOS platform. The criteria these app developers have to meet to even be allowed to operate as alternative marketplaces or make apps available via sideloading. And the complex user journey for those users who want to download and install alternative marketplaces and sideloaded apps.

We are concerned that Apple designed its new business model to discourage app developers and end users from taking advantage of the opportunities afforded to them by the DMA. The letter of the DMA is clear: gatekeepers have to allow for alternative app stores to establish themselves on their platforms; and for consumers to be fully informed about the offers available to them. So that they can freely choose where they want to source their apps, and at what conditions.

And there is more. Today, and after less than three months from opening, we adopt our first Preliminary Findings in a case of non-compliance. And it is again about Apple. About the many ways in which their new terms fall short of the DMA requirements regarding steering of users to options outside the Apple App Store. As they stand, we think that these new terms do not allow app developers to communicate freely with their end users, and to conclude contracts with them.

William Gallagher and Mike Wuerthele:

In a statement to AppleInsider, Apple said that it denies failing to comply with the DMA.

Throughout the past several months, Apple has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission. We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created.

All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate. As we have done routinely, we will continue to listen and engage with the European Commission.

John Voorhees:

In particular, the EC’s preliminary findings take issue with Apple’s response to the DMA’s anti-steering provisions[…]

Benjamin Mayo:

The Commission says Apple may charge a fee for facilitating “the initial acquisition of a new customer” via the App Store, but it essentially cannot charge for each ongoing transaction.

Tim Hardwick:

The Commission also said it was opening a new non-compliance procedure against Apple over concerns that its new contractual requirements for third-party app developers and app marketplaces, including its €0.50 Core Technology Fee, “fall short of ensuring effective compliance with Apple’s obligations under the DMA.”

Dan Moren:

Should the EC find Apple to not be in compliance in these areas, it would require a substantial reworking of much of Apple’s EU terms. As with the previous investigations, it will likely take some time for a final ruling to be issued, though we may get a preliminary ruling such as the one above in a matter of months.

This uncertainty is not good for anyone trying to build a business using App Marketplaces or Web Distribution.

Warner Crocker:

This will bounce back and forth over the next nine months and will probably become even more contentious given quotes like this from Thierry Breton, the EU internal market commissioner: “Apple’s new slogan should be ‘act different.’”

Previously:

• No Apple Intelligence or iPhone Mirroring in EU at Launch
• iDOS 3 Rejected From the App Store
• UTM Blocked Outside App Store via Notarization
• EU to Charge Apple for Violating DMA
• DMA Non-Compliance Investigations

Update (2024-06-25): Jesper:

In the DMA, the ground rule is for sideloading apps to be allowed, and to only very minimally be reigned in under very specific conditions. Apple chose to take these conditions and lawyer them into “always, unless you pay us sums of money that are plainly prohibitive for most actors”. Apple knew the rules and understood the intent and chose to evade them, in order to retain additional income.

In the App Store Guidelines, as written and period appropriate, the ground rule was for in-app purchases to be allowed only through the App Store’s native in-app purchase system, at the penalty of removal from the App Store. Epic chose to take those conditions, break them and lawyer up. Epic knew the rules and understood the intent and chose to evade them, in order to retain additional income.

It is completely fair to look at what Epic did and say “that was kind of a dick move”. (I personally think it was kind of a dick move, even as I agree with some downwind consequences.) But any argument that what Epic did was wrong and what Apple did was right hinges on distinctions that do not make sense to me.

[…]

Apple has a significantly easier time silently assenting to the qualms of dictatorships than to simply stop reaching into the pockets of customers, many of which have funneled tens to hundreds of thousands of dollars for the most consistently successful high margin product in the history of mobile telephony, or developers who have largely made those devices attractive in the first place.

John Gruber:

This sounds like they’re going to insist that Apple make installing sideloaded apps and alternative stores a no-hassle experience. What critics see is Apple putting up obstacles to installing marketplaces or sideloaded apps just to be a dick about it and discouraging their use to keep users in the App Store. What I see are reasonable warnings for potentially dangerous software. We’ll see how that goes.

[…]

For sideloading, Apple requires that developers “Be a member in good standing of the Apple Developer Program for two continuous years or more, and have an app that had more than one million first annual installs on iOS and/or iPadOS in the EU in the prior calendar year.” Apple’s requirements are an attempt to prevent fly-by-night scammers from opening marketplaces or offering nefarious apps for sideloading. But the EC sees that as a catch-22, where the only way to become a marketplace or offer sideloading is to already be a longstanding developer in Apple’s own App Store.

[…]

I complain as much as anyone about the aspects of the DMA that are vague (or downright inscrutable), but this aspect seems clear-cut. It’s a bit baffling why Apple seemingly sees notarization as an opportunity for content/purpose review, like with last week’s brouhaha over the UTM SE PC emulator.

Riley Testut:

We tried to warn Apple that rejecting UTM was illegal 😬

When we first met with the EC a few months ago, we were asked repeatedly if we trusted Apple to be in charge of Notarization. We emphatically said yes.

However, it’s clear to us now that Apple is indeed using Notarization to not only delay our apps, but also to determine on a case-by-case basis how to undermine each release — such as by changing the App Store rules to allow them.

For these reasons, we are no longer telling the EC we trust Apple to be in charge of Notarization. 🤷‍♂️

Paul Haddad:

I’m confused as to why the answer was an emphatic yes to begin with. At best the answer should’ve been Apple hasn’t weaponized notarization on Mac, yet…

Steve Troughton-Smith:

Apple is convinced

1) that they’re the good guys
2) that European regulators are dumb

It’s patently obvious that neither of these are the case. Until that actually sinks in, this is going to continue to be a rollercoaster.

Michael Love:

On Apple and the EU: if you take all of our EU revenue on iOS and move it to Android instead, it would be enough to make our Android revenue roughly even with our iOS revenue. In absolute terms it’s like 20% of iOS, but if you take 20% of iOS and move it to Android, Android ends up bigger than iOS, at least for us.

So from the standpoint of developer platform priorities, this is an extremely stupid game for Apple to play, and they stand to lose far, far more from it than from the DMA.

Update (2024-06-26): Nick Heer:

If you are somebody who believes it is only fair to take someone at their word and assume good faith, I am right there with you. Even though Apple has a long history of capricious App Review processes, it was fair to consider its approach to the E.U. a begrudging but earnest attempt at compliance.

[…]

That is, however, a rather difficult position to maintain, given the growing evidence Apple seems determined to evade both the letter and spirit of this legislation.

Update (2024-07-02): Steve Troughton-Smith:

I think how the EU intends to enforce & litigate the DMA has become much clearer over the past couple weeks[…]

Antitrust App Marketplaces App Store Apple Business Digital Markets Act (DMA) European Union iOS iOS 17 Lawsuit Legal Notarization Sideloading Web Distribution of iOS Apps

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