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Apple USD 50 million poorer as Dutch authorities uphold fine | Rob Harkavy | CDR Article

The US tech behemoth will still have to pay penalty despite complying with order.

The US tech behemoth will still have to pay penalty despite complying with order.

The Netherlands Authority for Consumers and Markets (ACM) has dismissed Apple’s objections to a USD 50 million penalty, which was levied in August 2021. The ACM had alleged that Apple abused its dominant position by imposing unreasonable conditions on dating app providers using the App Store. Despite Apple’s objections, the ACM has upheld the fine; Apple was told of the decision on 13 July, but it has only today been made public.

The investigation into Apple’s practices began in 2019 when the ACM conducted a market study that revealed potential competition issues related to how the App Store functions. The regulator found that app providers offering paid apps for digital services, such as dating apps, were subject to different conditions than those offering physical products. App Store terms and conditions required digital app providers to use Apple’s payment system (the IAP condition), and prohibited them from referring to other payment options outside the App Store (the anti-steering condition).

The ACM deemed these conditions unreasonable and in violation of European and Dutch competition rules, specifically Article 24 of the Dutch Competition Act and Article 102 of the Treaty of the Functioning of the European Union. The regulator argued that such abuse of a dominant position could lead to increased prices, reduced product and service quality, and limited innovation.

Apple contested the penalty decision in court but was unsuccessful. On 24 December 2021 the court rejected the company’s request to suspend the decision regarding both the IAP and anti-steering conditions and, consequently, ordered Apple to pay a penalty. Apple did, in fact, amend both conditions, but the ACM decided that it had not acted swiftly enough and therefore upheld its decision, levying a penalty of EUR 5 million per week until the newly compliant amendments had been put in place.

In addition to the IPA and anti-steering conditions, there is a third condition with which the company has yet to comply but, in line with the judgment of the court of appeal, ACM has chosen not to publish details because, it claims, a new preliminary injunction procedure would lead to unwanted delays.

Apple said in a statement: “We disagree with the ACM’s original order, which degrades investment incentives and is not in the best interests of our users’ privacy or data security,” Apple continued: “As the ACM has denied our administrative appeal, we will appeal to the Netherlands courts.”

Last month Apple was designated a ‘gatekeeper’ under the terms of the European Commission’s Digital Markets Act (DMA). The aim of the DMA is to prevent large digital players from abusing their dominant position, distorting competition, undermining consumer choice and stifling innovation. The other gatekeeper companies are AlphabetAmazon, ByteDanceMeta and Microsoft

Photo: Brett Gordon.

Apple USD 50 million poorer as Dutch authorities uphold fine

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