The European Commission has announced that it has decided to close its investigation into Apple’s user choice obligations under the Digital Markets Act (DMA). In less good news for Apple, it has also decided that Apple’s steering rules breach the DMA and fined it 500 million euros. It has also made a preliminary ruling regarding Apple’s contract terms for alternative apps.
Closure of investigation into Apple’s user choice obligations
The Commission closed the investigation against Apple regarding the DMA obligation that gives users in the EU the opportunity to easily uninstall any software applications and change default settings on iOS, as well as choosing their default web browser from a choice screen. This follows what the European Commission describes as a constructive dialogue between the Commission and Apple. As a result, Apple changed its browser choice screen, streamlining the user experience of selecting and setting a new default browser on iPhone. Apple also made it easier for users to change default settings for calling, messaging, call filtering, keyboards, password managers, and translation services on iPhones. A new menu now allows users to adjust their default settings in one centralised location, streamlining the customisation process. In addition, users can now uninstall several Apple pre-installed apps, such as Safari, a functionality which was previously unavailable. The Commission will keep monitoring Apple’s measures and continue its regulatory dialogue to ensure full and effective user choice, as required by the DMA.
Commission’s fine regarding Apple’s steering rules
Under the DMA, app developers distributing their apps via Apple’s App Store should be able to inform customers, free of charge, of alternative offers outside the App Store, steer them to those offers and allow them to make purchases.
The Commission has found that Apple fails to comply with this obligation. Due to several restrictions imposed by Apple, app developers cannot fully benefit from the advantages of alternative distribution channels outside the App Store. Similarly, consumers cannot fully benefit from alternative and cheaper offers as Apple prevents app developers from directly informing consumers of such offers. It has failed to demonstrate that these restrictions are objectively necessary and proportionate. The Commission has ordered Apple to remove the technical and commercial restrictions on steering and to refrain from perpetuating the non-compliant conduct in the future, which includes adopting conduct with an equivalent object or effect.
The fine imposed on Apple takes into account the gravity and duration of the non-compliance. Apple has indicated that it will appeal the fine.
Preliminary findings on Apple’s contract terms
Under the DMA, Apple is required to allow for the distribution of apps on its iOS operating system by means other than through the Apple App Store. In practical terms, this means that Apple should allow third party app stores on iOS and apps to be downloaded to the iPhone directly from the web.
Following an investigation, the Commission takes the preliminary view that Apple failed to comply with this obligation in view of the conditions it imposes on app (and app store) developers. Developers wanting to use alternative app distribution channels on iOS are disincentivised from doing so as this requires them to opt for business terms which include a new fee (Apple’s Core Technology Fee). Apple also introduced overly strict eligibility requirements, hampering developers’ ability to distribute their apps through alternative channels. Finally, according to the Commission, Apple makes it overly burdensome and confusing for end users to install apps when using such alternative app distribution channels.
Therefore, the Commission has preliminarily found that Apple has failed to demonstrate that the measures put in place are strictly necessary and proportionate. Apple can now respond.
