Apple will face a fine of up to 290 billion yuan! What's going on?

National Business Daily

2024-06-25 10:52Published on the official account of Sichuan Daily Economic News

Edited by: Du Yu

According to CCTV Finance on June 25, CNBC reported on the 24th that the European Commission issued an announcement on the same day, saying that after investigation, it was preliminarily determined that Apple's App Store (App Store) was suspected of violating the European Union's "Digital Markets Act". This is the "first shot" fired by the EU antitrust authorities against the tech giants after the law came into effect in March this year.

According to the European Commission, Apple's App Store rules prevent app developers from freely directing consumers to other channels for better deals on products and content. The European Commission also said it would investigate the "core technology fee" charged by Apple's App Store and the overly complicated steps for iPhone users to download apps from third-party channels.

The European Union has informed Apple of its preliminary opinion. According to the rules, Apple is now required to review the commission's findings and make a formal response. According to the schedule, the European Commission may make a final decision by the end of March 2025.

If Apple is ultimately found to be in violation, it will face a fine of up to 10% of its annual global revenue; In the case of repeat offenders, this fine can be up to 20%. However, Apple may also be exempt from fines if it can make changes that meet the requirements of EU rules.

According to public information, Apple's total revenue in fiscal year 2023 will reach 383.3 billion US dollars, and the company will receive nearly 40 billion US dollars (about 290 billion yuan) in fines based on a 10% fine.

Image source: Photo by reporter Zhang Jian

According to the Securities Times, in March this year, the European Commission launched an antitrust investigation against Apple under the newly effective Digital Markets Act. The survey lays out several concerns about Apple's business practices, including whether Apple is preventing app developers from letting users know about cheaper ways to subscribe to apps outside of Apple's ecosystem (AppStore).

According to a notice issued by the European Commission, it has informed Apple of its preliminary findings that the App Store rules violate the Digital Markets Act, as they prevent app developers from freely directing consumers to other channels for offers and content.

In addition, the European Commission has initiated new non-compliance procedures against Apple due to concerns that its new contractual requirements for third-party app developers and app stores, including Apple's new "core technology fees", will not ensure effective compliance with Apple's obligations under the DMA.

Margrethe Vestager, the EU's antitrust commissioner, listed some of the problems with Apple's App Store. "As things stand, we believe that some of the new terms of the AppStore don't allow app developers to communicate freely with their end users and not to enter into contracts with them," she said. ”

In addition, Vesteg criticized the fees Apple charges through the App Store for developers to initially acquire new customers, saying that these fees exceed the level necessary for such compensation. Vesteg said the EU will also investigate Apple's new contractual requirements for third-party app developers and app stores, and whether these requirements are necessary and reasonable.

Apple responded that it had made some changes over the past few months to comply with the Digital Markets Act. Apple said: "We are confident that the program will comply with the regulations. Under our new commercial terms, it is expected that more than 99% of developers will pay Apple the same or less. ”

As of the close of the U.S. stock market on June 24, local time, Apple was quoted at $208.14, up 0.31%, with the latest market value of $3.2 trillion.

In addition to Apple, six companies, including Google's parent company Alphabet, Amazon, ByteDance, Meta and Microsoft, are among the first "gate keepers" designated by the bill. These 6 businesses must fully comply with all DMA obligations by March 7, 2024.

On March 25 this year, the European Commission launched an investigation into Alphabet's rules on redirects in the Google Play and self-preference on Google Search, Apple's redirects in the Apple Store and web browser Safari, and Meta's "pay or consent model". In addition, the European Commission announced additional investigative steps to gather facts and information related to Amazon's self-preference, Apple's alternative app distribution and new business models.

The daily economic news integrates CCTV finance, securities times, and public information

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