APPLE is set to face the first-ever fine under the European Union’s new digital antitrust rules for Big Tech, representing an escalation of a clash with regulators over the dominance of its hugely profitable App Store.
Watchdogs are readying the penalty after the iPhone maker failed to allow app developers to steer users to cheaper deals and offers outside of the App Store, according to sources familiar with the case, who spoke on condition of anonymity.
The penalty, under the tough new Digital Markets Act (DMA), is set to come just months after Cupertino, California-based Apple was hit with a 1.8 billion euros (S$2.6 billion) fine for similar abuses under the bloc’s traditional competition rules – involving music streaming service Spotify.
The European Commission could still unleash the fine before current EU competition commissioner Margrethe Vestager is due to leave office later this month, according to the sources.
But there was a chance it could be pushed back to later this year, they said. The fine could also be accompanied by periodic penalty payments, levied on Apple until it complies with the law, said the sources, adding that the decision was still being drafted.
Apple spokespeople did not immediately respond to a request for comment. The European Commission declined to comment.
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The move follows a warning to Apple in June that it must give developers effective means to steer users away from its App Store or face future penalties. In contrast to traditional antitrust law, the DMA is designed to head off anticompetitive behaviour before it is too late to wreck markets for good.
Under the law, EU regulators have powers to fine the world’s most powerful tech firms 10 per cent of their global annual sales, 20 per cent in the event of repeated infringements, or periodic fines of as much as 5 per cent of the average daily revenue.
In fourth-quarter results posted last week, Apple reported sales of US$94.9 billion, compared with an average estimate of US$94.4 billion. Revenue from the iPhone came in at US$46.2 billion, beating estimates of US$45 billion.
Apple shares rose less than 1 per cent to US$223.45 at the close in New York on Tuesday (Nov 5). They are up 16 per cent this year.
Vestager has locked horns with Apple several times during her period in Brussels. In the Spotify dispute, she accused Apple of blocking its rival from informing users of cheaper deals away from Apple’s App Store.
Vestager also grabbed the headlines when she ordered Apple to repay 13 billion euros in allegedly unfair tax breaks from Ireland. Soon after that order, Apple chief executive officer Tim Cook called the commission’s case “political crap”.
Earlier this year, EU antitrust regulators also managed to force Apple to allow third parties use the iPhone’s payment chip to handle transactions, a move that allows banks and other services to compete with the Apple Pay platform. BLOOMBERG
