Source: Finance Association
Author: Shi Zhengcheng
① Apple may be the first target of charges brought by the European Union under the Digital Market Act;
② The core issue still focuses on the Apple App Store ecosystem and the move to charge additional developers;
③ Alphabet and Meta are also “within range” of the European Union.
According to the latest news on Friday, although Apple, which is recognized as the “gatekeeper” of tech giants, has made a series of historic changes in the face of the “Digital Market Act” that has just come into effect in the EU, it has not escaped the fate of EU accusations.
More monumental, Apple is also likely to become the first tech giant to be charged after the EU's new digital law goes live.
The old problem hasn't been fixed, and a new one has appeared
According to several people familiar with the matter, the EU investigation confirmed that Apple failed to fulfill its obligation to “allow app developers to guide users to offers outside the App Store” without charging additional fees.
If Apple is found to be in violation of the law, the fine can be up to 5% of daily turnover, which in turn is probably slightly more than 1 billion US dollars.
Of course, Apple's “lightning point” was not only that it failed to meet the requirements of an open app store ecosystem; at the same time, the new “core technology usage fee” introduced this year also raised regulatory questions.
As a response policy to the entry into force of the Digital Market Act (DMA), Apple announced at the beginning of the year that it will allow sideloading of apps in the EU market—that is, users can download apps on third-party app stores, and naturally use other payment channels.
Doing so also meant that Apple was unable to receive up to 30% of the App Store commission. To solve this problem, Apple did two things: for developers who continue to use the App Store, the commission rate was reduced from (maximum) 30% to 17%, and the commission rate charged by one-year subscriptions or small businesses was further reduced to 10%.
For developers trying to bypass the App Store, Apple is indeed unable to charge a commission, but has prepared another form of charging — a “core technology usage fee.” For software that is downloaded more than 1 million times a year, every year the user installs the software for the first time, the developer has to pay 0.5 euros to Apple. It is important to note that installing software updates is also counted as a number of times, so this amount is equivalent to the annual fee that app developers need to pay to Apple on a regular basis according to the number of customers.
Apple also very thoughtfully made a “core technology usage fee” calculator for developers. For an app that is installed 10 million times a year, even if it is distributed from a third-party app store and doesn't generate any revenue, the developer still has to pay 375,000 euros to Apple every month, which is 4.5 million euros in a year.
Some developers think they actually have to pay more “Apple Tax” because of this additional fee. According to statistics from Sensor Tower, in the second quarter of the new EU regulations, the Apple App Store's consumer spending “remained relatively stable,” which meant that most developers were still on the sidelines, and the new regulations had little impact on Apple's “money bag.”
People familiar with the matter said that the European Union may also file preliminary charges against Apple in the near future.
The target is not only Apple
Apple declined to comment on the “first bullet” that may be subject to the new regulations, pointing to a previous statement saying that Apple believes the company's plan complies with the Digital Market Act and will continue to interact constructively with the European Union to cooperate with them in their investigations.
In addition to Apple, other US tech giants are also “within range” of the EU: the cases under investigation include whether Google's parent company Alphabet favors its own app stores, and whether Meta misuses personal data in EU advertisements.
The EU investigation is also a microcosm of global antitrust agencies' increased scrutiny of leading internet platforms. In March of this year, the US Department of Justice officially sued Apple in court, accusing it of abusing its position in the smartphone field, suppressing competitors, and limiting consumer choices.
Editor/Jeffy