Apple Set To Be Fined Under EU’s Tough DMA

Tim Cook may be concerned that Apple could potentially be in line for another stinging financial penalty on this side of the pond.

Sources with direct knowledge of the matter told Reuters on Tuesday that Apple is set to be fined by the European Union’s antitrust regulators under the bloc’s landmark rules, making it the first company to be sanctioned by the Commission.

It comes after the European Commission said earlier this month that it would assess whether Apple’s iPad operating system complies with the company’s obligations under the Digital Markets Act antitrust rules.

Potential fine

The Commission in April had designated the iPad as a “gatekeeper” device under DMA rules, meaning it must comply with regulations such as users to set their default browser, permitting alternative app stores and allowing headphones and smart pens access to iPadOS features.

And then the European Commission said in June that it believed Apple was in breach of the DMA over its restrictions on the ways it allows App Store developers to communicate with users.

Apple said at the time it was “confident our plan complies with the law”.

In September the Commission said it would start “specification proceedings” to “guide” Apple on certain specific areas of DMA compliance.

Violation of the DMA rules can entail fines of up to 10 percent of a company’s annual global turnover, or 20 percent in the case of repeat offences.

If Apple is charged, it would be the first major tech platforms to be pinged under the EU DMA.

Financial penalty

It should be remembered that Apple has already been impacted by a hefty financial penalty in Europe.

In September Apple had been ordered by the Court of Justice of the European Union (CJEU) to pay Ireland €13bn (£11bn or $14.4 billion) in unpaid taxes – in a move that ended an eight year battle.

The case stemmed back to 2016, when the European Commission had ordered a reluctant Irish government to recover up to 13 billion euros plus interest in “illegal tax benefits”, after it found that two Irish tax rulings had artificially reduced Apple’s tax burden to as low as 0.005 percent in 2014.

Apple, in its recent Q4 and FY24 financial results, blamed a one-time income tax charge of $10.2 billion for a fall in its profits.

Apple is also appealing against the European Commission decision in March to fine it more than 1.8 billion euros (£1.6bn) after the Commission alleged there was an abuse of Apple’s dominant position for music streaming with its App Store.