In a significant development, European Union regulators have leveled charges against Apple, accusing the tech giant of preventing app makers from directing users to more affordable alternatives outside of its App Store. The charges are the first to be made under the EU's new digital competition rulebook, known as the Digital Markets Act (DMA). The European Commission's preliminary investigation findings revealed that Apple's restrictions on developers using its App Store violated the DMA.

The DMA, which aims to prevent tech "gatekeepers" from monopolizing digital markets, empowers regulators to impose heavy financial penalties. It came into effect in March and prompted the European Commission to launch multiple investigations, including ongoing probes into Apple's facilitation of web browser changes for iPhone users, as well as investigations involving Google and Meta.

Apple has faced increasing pressure on both sides of the Atlantic to dismantle competitive barriers surrounding its lucrative iPhone franchise. The U.S. Justice Department filed an antitrust lawsuit earlier this year, alleging Apple's illegal monopolization of the smartphone market and exclusion of competitors, which stifles innovation and maintains artificially high prices. The lawsuit was filed after Apple began complying with a U.S. court order to allow alternative payment system links within iPhone apps. However, a judge expressed frustration with Apple's approach and suggested additional changes may be necessary.

App developers, including Spotify, have long complained about Apple's requirement that subscriptions be purchased exclusively through iOS apps, allowing the company to charge commissions of up to 30%. European regulators previously fined Apple $2 billion for favoring its music streaming service over competitors like Spotify. The DMA mandates that app developers must have the freedom to inform customers about cheaper purchasing options and direct them to such offers.

Apple now has an opportunity to respond to the European Commission's findings, and a final decision on the company's compliance will be made by March 2025. If found guilty, Apple could face fines amounting to up to 10% of its global revenue, potentially reaching billions of euros, or daily penalties.

The regulatory tensions have prompted Apple to consider excluding the European market from its upcoming package of new artificial intelligence features due to what it perceives as burdensome EU regulations. However, the European Commission remains steadfast and has opened another investigation into the contractual terms Apple is offering app developers.

Specifically, regulators are scrutinizing a new "core technology fee" of 50 euro cents (54 cents) charged to developers for each download and installation of apps from outside of Apple's App Store. The DMA provisions are designed to encourage alternative app stores, providing consumers with more choices. Rivals of Apple have criticized the fee, stating that it may dissuade many existing free apps from moving away from Apple's platform.

Margrethe Vestager, the European Commissioner for Competition, expressed her concerns on social media, stating that Apple's new business model makes it difficult for app developers to operate in alternative marketplaces and reach their end users on iOS. Meanwhile, Apple claims to have made changes in compliance with the DMA based on feedback from developers and the European Commission. The company estimates that over 99% of developers would pay the same or reduced fees under the new business terms.

Apple emphasizes its willingness to engage with the European Commission and states that all developers utilizing the App Store in the EU have the opportunity to utilize the newly introduced capabilities, including the option to direct app users to complete purchases on the web at competitive rates.

In a related development, the EU's previous investigation into whether Apple's in-app purchasing system violated antitrust rules is being discontinued to focus solely on the DMA investigation, which explicitly outlines Apple's prohibited actions, according to the European Commission's announcement on Monday.