EU challenges Apple over App Store practices and Core Technology Fee

The European Commission has announced a preliminary view that Apple’s App Store anti-steering rules violate the Digital Markets Act (DMA), marking a significant step in the ongoing scrutiny of Apple’s business practices in the European Union.

The Commission is also launching a formal investigation into Apple’s ‘alternative business terms,’ which allow developers to release apps outside of the App Store. This investigation will scrutinize the Core Technology Fee (CTF), a per-install payment structure, and the complexity of the process required to enable and install third-party app marketplaces. These terms and practices are being examined to determine their compliance with DMA regulations.

Margrethe Vestager, the head of EU competition policy, stated, “The developers’ community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts.”

Apple now has a window to respond to the Commission’s preliminary decision on the anti-steering rules. If found in violation, Apple could face fines amounting to 10% of its global revenue. A final ruling is expected by March 2025. The DMA mandates that developers using the App Store must be allowed to inform customers about alternative purchase options, including directing them to external offers and enabling purchases without incurring charges.

Currently, Apple’s App Store rules restrict developers from advertising alternative pricing or distribution channels within their apps. Although developers can include a link to a web page, this is not deemed sufficient due to Apple’s restrictions on link behavior and the significant commission applied to purchases made through such links, including those made within seven days of a user following a link from the app.

The Commission’s investigation extends to Apple’s Core Technology Fee, a 50 euro cent fee per install per year, and the multi-step process required to download and install an alternative app marketplace or app. This investigation will assess whether these practices are fair and comply with the DMA. Additionally, the eligibility requirements for developers to offer their apps outside the App Store, such as having been in good standing for at least two years, will also be examined.In April 2024, the Commission also designated Apple as a gatekeeper under the DMA concerning iPadOS, its operating system for tablets.