Apple finds itself fighting regulatory battles on multiple fronts as both European Union authorities and U.S. federal courts demand significant changes to its App Store practices. The tech giant is confronting simultaneous legal challenges that could fundamentally reshape how it operates its digital marketplace and collects revenue from app developers.
EU Deadline Looms with Daily Fines at Stake
The European Commission has given Apple fewer than 30 days to comply with the Digital Markets Act or face substantial daily penalties. The warning comes after regulators determined that Apple's current App Store policies continue to violate the DMA, despite previous attempts at compliance. At the heart of the dispute are Apple's restrictions that prevent app developers from freely communicating with users about alternative payment methods and external purchasing options.
The Commission previously imposed a EUR 500 million fine in April and ordered Apple to remove anti-steering provisions within 60 days. With the June 22 deadline approaching rapidly, Apple faces the prospect of additional periodic fines reaching up to five percent of its daily global revenue until full compliance is achieved. European regulators argue that Apple's recent changes, including allowing single external links with a 27 percent commission fee, still fall short of the law's requirements.
Key Financial Penalties:
- EUR 500 million fine already imposed by European Commission
- Potential daily fines up to 5% of Apple's global daily revenue for non-compliance
- Current App Store commission: 30% standard, reduced to 27% for external links in EU
U.S. Appeals Court Rejects Apple's Emergency Request
Simultaneously, Apple suffered a setback in U.S. federal court when an Appeals Court denied its emergency request to halt a judge's order requiring App Store modifications. The original ruling, stemming from Epic Games' 2020 lawsuit, demanded that Apple allow web links, cease restricting link formatting, and enable developers to offer external payment options without giving Apple a revenue cut.
The Appeals Court stated it was not persuaded that blocking the order was appropriate after considering Apple's chances of success on appeal and the broader public interest. This rejection suggests Apple faces an uphill battle in overturning the requirements, which have already prompted major apps like Spotify and Kindle to add external purchasing options.
Timeline of Legal Actions:
- 2020: Epic Games files lawsuit against Apple
- April 2024: European Commission fines Apple EUR 500 million
- April 2024: U.S. federal judge orders App Store changes
- June 22, 2024: EU compliance deadline (less than 30 days remaining)
Developer Response and Market Impact
The legal pressure is already producing tangible changes in the App Store ecosystem. Fortnite has returned to the platform, offering users a choice between Apple's in-app payment system and Epic's own payment program. Epic CEO Tim Sweeney reported a 60-40 split in usage, with Apple's system still maintaining a slight advantage despite the alternatives.
Major applications including Spotify and Kindle have quickly implemented web purchase options following the court rulings. These changes represent the most significant modifications to Apple's App Store model since its launch, potentially affecting the company's services revenue stream that has become increasingly important to its overall financial performance.
Market Response:
- Fortnite payment system usage: 60% Epic's system, 40% Apple's system
- Major apps adding external links: Spotify, Kindle
- Apps must use Apple's format and display warnings when linking externally
Apple's Defense Strategy
Apple continues to strongly contest both regulatory actions, arguing that the requirements threaten user privacy and security while forcing the company to provide its technology without compensation. The company characterized the European Commission's decision as bad for innovation, bad for competition, bad for our products, and bad for users. Apple has signaled its intention to appeal both rulings while implementing the minimum changes necessary to avoid additional penalties.
The company maintains that its App Store policies protect users from security risks and ensure a consistent experience across its ecosystem. However, regulators on both sides of the Atlantic have dismissed these privacy and security concerns as unsubstantiated, viewing them as attempts to maintain market control rather than genuine user protection measures.