Apple vs. the EU: The Digital Markets Act Showdown Heats Up

From the moment the Digital Markets Act (DMA) came into force in March 2024, Brussels signaled that its ambition extended far beyond mere rhetoric. When the European Commission announced on March 25 that its preliminary findings indicate Apple’s App Store policies breach the DMA’s strictures, it did more than challenge a single company it threw down the gauntlet in a contest between entrenched platform power and the vision of an open digital economy.

Apple, designated alongside Alphabet, Meta, and Amazon as a “gatekeeper,” had already taken tentative steps toward compliance: it opened the door to alternative app stores in Europe and allowed limited “link-out” communications to external purchasing options.

Yet the Commission judged these measures half-hearted, arguing that fees for external link-outs and burdensome approval processes effectively preserve Apple’s monopoly over app distribution and consumer choice.

Central to the dispute is Apple’s prohibition on in-app steering. Under current App Store rules, developers cannot inform users of cheaper subscription or purchase paths outside Apple’s walled garden. While Apple has grudgingly permitted some link-outs, the condition that developers pay fees to steer customers and adhere to restrictive communication guidelines undermines any real freedom.

Equally contentious is the so-called Core Technology Fee a €0.50 levy on every install above one million downloads, even for apps distributed via third-party stores.

Critics argue this surcharge disincentivizes competition by penalizing success and complicates the economics of emerging platforms striving to challenge the App Store’s dominance.

Should the Commission’s preliminary conclusions be upheld in its final decision anticipated by March 2025 Apple could face fines of up to 10 percent of its global turnover, potentially exceeding $38 billion based on 2023 revenues.

Meta’s Statement

“The European Commission is attempting to handicap successful American businesses while allowing Chinese and European companies to operate under different standards. This isn’t just about a fine; the Commission forcing us to change our business model effectively imposes a multi-billion-dollar tariff on Meta while requiring us to offer an inferior service. And by unfairly restricting personalized advertising the European Commission is also hurting European businesses and economies.”

— Joel Kaplan, Chief Global Affairs Officer, Meta

More profoundly, the company would be compelled to dismantle its anti-steering provisions and rethink its fee structures, effectively eroding the economic foundation on which the App Store’s profitability rests.

Apple insists such reforms would imperil user privacy and security, insisting its curated ecosystem guards against malware and protects consumer data. Brussels, however, maintains that privacy safeguards need not be wielded as pretexts for anti-competitive conduct; an open, interoperable digital market and robust security standards can, in principle, coexist.

This confrontation is far from an isolated European skirmish. In the United States, the Department of Justice has filed antitrust litigation accusing Apple of monopolizing smartphone markets, and regulators in South Korea, Japan, and Australia are crafting their own digital competition rules.

For app developers and nascent platforms, Europe’s hard-line stance offers a beacon of hope: a legal framework that may finally pry open tightly controlled marketplaces. Consumers, too, stand to gain from increased choice and downward pressure on pricing. Yet the specter of regulatory fragmentation looms large.

Divergent rules across jurisdictions could saddle developers with compliance nightmares, and users may grapple with inconsistent experiences from one region to the next.

The coming months will test the DMA’s potency. By September 2024, Apple must formally respond to the Commission’s allegations, laying out its legal and technical arguments. Six months later, a definitive ruling will either vindicate Brussels’ strategy or expose its limitations.

Parallel probes into Meta’s “pay or consent” data practices and Google’s search self-preferencing will further illuminate how far the EU is willing to push the largest digital players.

More than any individual case, Apple’s showdown with the EU reflects a turning point in global tech governance. If the DMA can force meaningful concessions from one of the world’s most powerful companies, it will stand as proof that regulatory ambition can match corporate might.

For startups and smaller competitors, a new playing field may emerge—one where innovation, not entrenched control, determines success. For Apple and its peers, the message is clear: superficial tweaks will no longer suffice.

As Margrethe Vestager, the Commission’s Executive Vice-President for Competition Policy, aptly put it, “The DMA is here to ensure open markets, not just in theory, but in practice.” The outcome of this fight will resonate far beyond Europe’s borders, shaping the balance between innovation and oversight in the digital age.