Financial Times Reports EC to Charge Apple With Non-Compliance Under DMA for CTF

Javier Espinoza reporting from Brussels, and Michael Acton from San Francisco, for the Financial Times (archive link in case your FT subscription isn’t working):

The European Commission has determined that the iPhone maker is not complying with obligations to allow app developers to “steer” users to offers outside its App Store without imposing fees on them, according to three people with close knowledge of its investigation. The charges would be the first brought against a tech company under the Digital Markets Act, landmark legislation designed to force powerful “online gatekeepers” to open up their businesses to competition in the EU.

The commission, the EU’s executive arm, said in March it was investigating Apple, as well as Alphabet and Meta, under powers granted by the DMA. An announcement over the charges against Apple was expected in the coming weeks, said two people with knowledge of the case. [...]

If found to be breaking the DMA, Apple faces daily penalties for non-compliance of up to 5 per cent of its average daily worldwide turnover, which is currently just over $1bn.

The EC leaks everything to the Financial Times. Reuters points out that EU antitrust chief Margrethe Vestager leaves office in November. Makes me wonder if there’s a clock-running-out aspect to this. Does the incoming regime share her politics regarding US tech companies?

Forget about trying to figure out what the EC wants from reading the DMA. It doesn’t say. I suspect they want Apple to completely forgo monetization of its IP on iOS — to allow the distribution of iOS apps without any charge or fee whatsoever other than the $99 annual developer program fee. I’m not sure, at all, how Apple is going to respond, but I do not think the EC is going to get that. I also don’t think they’re ever going to collect any significant fines from Apple.

My basic theory is that what the EC has wanted all along is to force Apple not merely to open up iOS to other methods of distribution, but to force Apple to allow apps to be distributed through those non-App-Store channels free of charge. But they don’t want to come out and say, flatly, that they seek to forbid Apple from monetizing its IP from all developers on the platform, because that’s so radically anti-capitalist. So instead they wrote the DMA to forbid the way Apple had, heretofore, mandated its cut of App Store revenue, and I suspect they somehow thought that if they banned the current rules — all apps must go through the App Store, all apps must use Apple’s App Store payment processing — then Apple would be forced to allow free-of-charge distribution through other channels and other payment processing. They didn’t foresee the Core Technology Fee as a route to collect a cut from any and all popular applications distributed by large commercial developers. So they’re just going to say that’s not allowed either, even though it seemingly doesn’t violate anything in the DMA. I don’t know where this winds up because I don’t see Apple conceding this point.

★ Monday, 17 June 2024