Apple appeals €500 million EU fine over App Store rules under Digital Markets Act

Apple Inc. has formally appealed a €500 million ($580 million) fine imposed by the European Commission, arguing that the penalty is “unprecedented” and the changes demanded of its App Store operations in the European Union are both “unlawful” and detrimental to developers and consumers alike,reported Bloomberg.

The fine, issued in April under the bloc’s newly enforced Digital Markets Act (DMA), accused the iPhone maker of preventing app developers from guiding users toward alternative payment options outside of the App Store ecosystem. Regulators claimed Apple’s previous policies effectively stifled competition by blocking developers from informing users about cheaper purchasing avenues beyond Apple’s tightly controlled platform.

In a strongly worded statement released on Monday, Apple said, “We believe the European Commission’s decision and their unprecedented fine, go far beyond what the law requires. As our appeal will show, the EC is mandating how we run our store and forcing business terms which are confusing for developers and bad for users.”

Moreover, in response to regulatory pressure, Apple revised its EU App Store policies in June, rolling out a new tiered commission structure. Under the updated model, developers can now opt for a five per cent or 13 per cent commission rate, in addition to a two per cent user acquisition fee. These rates depend on whether apps appear in App Store search results, receive promotional support or benefit from automatic updates.

Apple claims that the revised commission model was created to comply with the European Commission’s requirements but insists it has introduced complexity that disadvantages both developers and consumers. The company argues that no other app distribution platform is subject to such a structure.

Additionally, Apple has loosened restrictions that previously limited how developers could promote payment alternatives. Developers in the EU can now direct users more freely to external websites to complete digital purchases, thereby avoiding some of Apple’s transaction fees.

The tech giant also took issue with what it describes as an unlawful expansion of the term “steering”, the practice of redirecting users to make transactions elsewhere, claiming the Commission has broadened its definition in a way that unfairly targets Apple’s business practices.

This dispute adds to a growing list of legal and regulatory challenges Apple faces globally over its App Store rules. In the United States, a federal judge recently ruled that Apple must allow American developers to guide users towards third-party payment options, a decision that could have significant financial implications for the company’s services revenue.

(With inputs from Bloomberg)