Apple faces first EU fine under Bloc’s Digital Markets Act

On By Littum

(Bloomberg) — Apple Inc . is set to face the first-ever fine under the EU’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.

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Watchdogs are preparing the punishment after the iPhone maker failed to allow app developers to steer users to cheaper deals and offers outside the App Store, according to people familiar with the matter, who spoke on condition of anonymity.

The penalty, under the tough new Digital Markets Act, is set to come just months after Cupertino, California-based Apple was hit with a 1.8 billion euro ($2 billion) fine for similar abuses under the bloc’s traditional competition rules – involving music streaming service Spotify.

The EU Commission can still release the fine before the current EU Competition Commissioner Margrethe Vestager has to leave her office later this month, according to the people.

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 imposed on Apple until it complies with the law, the people said, 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.

The move follows a warning to Apple in June that it must provide developers with effective means to steer users away from its App Store or face future sanctions. Unlike traditional antitrust law, the DMA is designed to deter anti-competitive behavior before it is too late to destroy markets for good.

Under the law, EU regulators have powers to fine the world’s most powerful technology companies 10% of their global annual sales, 20% in the case of repeated violations or periodic fines of up to 5% of average daily turnover.

In fourth-quarter results released last week, Apple reported sales of $94.9 billion, compared to an average estimate of $94.4 billion. iPhone revenue came in at $46.2 billion, beating estimates of $45 billion.

Apple shares rose less than 1% to $223.45 at the close in New York on Tuesday. They are up 16% this year.

Vestager has locked horns with Apple several times during her time in Brussels. In the Spotify dispute, she accused Apple of blocking its rival from informing users of cheaper offers away from Apple’s App Store.