Brussels has accused Apple Inc. AAPL of violating European Union regulations. The tech giant could face a penalty of up to 10% of its global annual revenue.
What Happened: Belgium has accused Apple of stifling competition on its app store, marking the first time EU regulators have used new digital rules on a big tech group, reported the Financial Times on Monday.
The regulatory action is under the Digital Markets Act, which aims to break the dominance of large technology platforms and support startups.
If Apple is found guilty, it could face a penalty of up to 10% of its global annual revenue. The fines could increase to 20% if the offense is repeated, the EU stated.
"Apple's new slogan should be ‘act different'. Today we take further steps to ensure Apple complies with the DMA rules," Thierry Breton, the EU internal market commissioner, said.
The commission’s preliminary findings have to be finalized within a year from the start of its official investigation in March.
"We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created," Apple Inc said.
Why It Matters: This regulatory action comes on the heels of significant changes Apple has already made to its App Store in Europe. In January, Apple announced a major overhaul to comply with the EU’s competition law set to take effect in March. This includes allowing iPhone and iPad users in Europe to use other app stores to download applications. Banks and shopping service companies will also be able to offer alternative payment methods inside their apps.
Moreover, this is part of a broader trend where tech giants like Alphabet Inc. GOOGL GOOG and Microsoft Corp. MSFT are also making adjustments to comply with the Digital Markets Act. For instance, Google has been working to meet stringent regulations by making significant changes to its business practices and interfaces.
The scrutiny on Apple also aligns with broader concerns about the dominance of major U.S. tech companies in Europe. A coalition of 26 European industry groups recently called for a non-discriminatory approach to the proposed European Union Cybersecurity Certification Scheme, emphasizing that tech giants like Amazon.com, Inc. AMZN and Google should not be unfairly targeted.
Price Action: Apple Inc.’s stock last closed at $207.49, down 1.04% for the day. In pre-market trading, the stock rose by 0.20%. Year to date, Apple's stock has seen significant growth, increasing by 11.77%, according to the data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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