Apple will appeal punitive EU antitrust fine

Apple has been hammered with a huge €500 million ($570 million) fine by Europe’s antitrust authorities, who have demanded changes in Apple’s business practices that will deliver little significant benefit to consumers.

Europe says Apple breached its anti-steering obligation under the Digital Markets Act (DMA), and is forcing changes in the company’s business practices, as well as fines.

Apple will appeal

In a statement, Apple told Computerworld: 

“Today’s announcements are yet another example of the European Commission unfairly targeting Apple in a series of decisions that are bad for the privacy and security of our users, bad for products, and force us to give away our technology for free. We have spent hundreds of thousands of engineering hours and made dozens of changes to comply with this law, none of which our users have asked for. Despite countless meetings, the Commission continues to move the goal posts every step of the way. We will appeal and continue engaging with the Commission in service of our European customers.”

Europe’s approach has been uniquely Apple-centric, making demands of the company that are not equally made against its competitors. As part of today’s judgment, Apple is also being forced to open up to third-party app store sales, and to permit developers to let customers know of alternative offers outside Apple’s App Store, steer them to those offers and allow them to make purchases.

What Europe wants

Apple had attempted to craft an approach to these demands that tried to balance platform security and the costs of building the platforms against what Europe wanted. Under those terms, developers had been asked to agree to certain terms, including payment of a Core Technology Fee.

The Commission has rejected Apple’s approach, insisting instead that:

Apple must change the business terms through which it enables external app store sales.

The Apple Core Technology fee may need to be abolished.

Apple must make it easier to set up third-party stores.

It must make it easy for consumers to install apps from third-party stores. (I fear this also means it cannot warn customers of the risks of using external stores.)

Apple must bring itself into compliance with these demands within 60 days or risk periodic penalty payments.

It is to be noted that Meta was also fined today.

All it really means

In theory, these changes mean apps will be sold through multiple competing stores. That won’t be how things shape up, of course. Some stores will turn out to be malware-infested money traps; others will sell illegal or immoral content; others will show themselves over time to lack standards of customer, privacy, or security support; other developers will use the system to fragment the user experience. 

Over time we will see stores fail, fall foul to fraud, or go out of business, leaving no clear path for customer compensation or app longevity. Ultimately there will be one or two surviving stores, as well as Apple, and all three will be owned by corporations, rather than by any up-and-coming European tech firm.

That latter isn’t going to happen, and if it does, will only be in specific domains. Through these inevitable evolutions, it will be Apple Support that customers first call for help when things do go wrong, even if responsibility rests with the third-party store. Perhaps this is an improvement, but I don’t see it.

This fragmentation will also expose European customers to security and privacy attacks, as some of these stores will not hold the same degree of respect for privacy as Apple.

Rewarding good behavior?

There is a little good news for Apple in Europe’s judgement, which says the company worked ‘constructively’ with EU regulators on the overall antitrust inquiry. Another strand to this had been an investigation into how Apple enabled user choice on its platforms. Europe has closed that strand of the case, saying Apple has acted to regain compliance. Those actions include giving users in the EU choices of alternative apps and an easy interface through which to make such changes.

One thing that isn’t clear is the extent to which Europe is demanding that Apple makes all its new features available to third-party competitors from day one.

Ostensibly to ensure competition, Apple had complained that this restriction forced the company to develop for its competitors for free, and that the cost of delivering this would require it to develop for multiple operating systems before launch, slowing innovation and costing a lot of cash. Apple already has 500 developers working on EU compliance, which means Europe becomes an increasingly expensive place to do business.

Politically driven nonsense

One more thing to highlight is the extent to which Apple has become a punching bag for increasing tension between Europe and the US following the imposition of trade tariffs. In the prelude to today’s announcement, some industry watchers had reported that Europe intended to demand a lower fine from the companies it was about to punish. In the case of Apple, that fine still came down to more than half a billion dollars.

Perhaps that is seen as small change in Europe, which has given itself the right to demand up to 10% of a company’s global revenue for offenses against the DMA, but it is unlikely to placate the US administration, which has already warned it will act against nations that act against US tech firms.

Apple, which is already being punished by the deteriorating relationship between China and the US, may yet end up seeing further challenges if a tit-for-tat trade war between the US and the EU breaks out.

At what point do Europe’s own consumers become casualties of increasing the cost of doing business there?

You can follow me on social media! Join me on BlueSky,  LinkedIn, Mastodon, and MeWe.