Initial EU probe into App Store 'anti-steer' rules finds Apple in breach of competition law

June 24 (UPI) -- European Union anti-trust regulators notified Apple on Monday that App Store rules preventing developers from "steering" consumers to offers and content outside of the app breach the bloc's Digital Markets Act.

The preliminary finding of a three-month probe found that Apple's terms of business infringe the legal right of developers distributing their apps via the App Store to, without being charged, inform their customers of cheaper alternatives, steer them to those offers and allow them to make purchases, the European Commission said in a news release.

"None of these business terms allow developers to freely steer their customers. For example, developers cannot provide pricing information within the app or communicate in any other way with their customers to promote offers available on alternative distribution channels," the EC said.

Regulators said steering that was allowed, via so-called "link-outs" where app developers include an in-app link to a web page where customers can sign up for a contract, was subject to several restrictions preventing developers from communicating, promoting offers and concluding contracts through the distribution channel of their choice.

The commission also ruled that the fees Apple charged developers for acquiring customers via the App Store went beyond what was reasonable and fair, such as an additional fee for every purchase a customer makes within seven days of a link-out from the store.

It announced a parallel DMA non-compliance probe into Apple's new contractual terms for developers providing alternative app stores or apps for iPhones including a so-called Core Technology Fee, hoops consumers are required to jump through to successfully download and install alternative app stores or apps, and whether strict eligibility requirements are necessary and proportionate.

Hailing the move in the enforcement of the DMA -- which Apple, Alphabet, Amazon, ByteDance, Meta and Microsoft had to comply with in full by March 7 -- the commission's executive vice president for competition policy, Margrethe Vestager, said the notification was a "very important day for the effective enforcement of the DMA."

"Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers' app stores and for consumers to be aware of better offers," Vestager said.

"We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third-party app stores and sideloading. The developers' community and consumers are eager to offer alternatives to the App Store. We will investigate to ensure Apple does not undermine these efforts."

The commission said if its provisional findings on steering become final, all three sets of Apple's business terms would be in breach of the DMA and it would adopt a non-compliance decision within 12 months from the date it opened its probe March 25.

Under the 2022 law, the commission can impose fines of up to 10% of a "gatekeeper's" total worldwide turnover for each infringement, rising to as much as 20% for repeated offenses and in the case of systematic abuses, breaking them up or banning takeovers of related businesses.

In March, the EU fined Apple at least $1.95 billion for exploiting its market dominance to illegally block music subscription providers directing App Store users toward cheaper prices for the same subscription elsewhere.

The EC said it had imposed the penalty after an anti-trust investigation found Apple had "anti-steering provisions" in place that prevented streaming services such as Spotify from telling owners of iOS devices such as iPhone and iPad about other services.