Apple is poised to become the first major tech company to face a fine under the European Union’s newly established Digital Markets Act (DMA), signalling a significant escalation in the ongoing tension between the tech giant and EU regulators over its control of the App Store. This potential fine comes after Apple allegedly failed to comply with a key provision of the DMA, which mandates that app developers be allowed to direct users to cheaper alternatives outside the App Store.

The European Commission is preparing to impose the penalty after Apple did not make necessary changes to allow developers to offer users discounts or alternative deals that bypass the App Store’s payment system. The DMA aims to curb this practice to promote fair competition. Sources familiar with the case indicated that the fine could be issued before European Competition Commissioner Margrethe Vestager’s term ends later in November, although it could be delayed until 2025.

This fine would be the latest in a series of legal challenges Apple faces over its App Store practices. Earlier in the year, the company was fined 1.8 billion euros for similar violations under the EU’s traditional competition laws, stemming from accusations that it blocked Spotify, a competitor to its music streaming service, from informing users about cheaper subscription options outside the App Store. However, under the more stringent DMA, the new fine represents an even more significant regulatory step, as the act is designed to prevent anti-competitive behaviour before it can disrupt the market.

The DMA gives the European Commission the authority to impose hefty fines on dominant tech firms, with penalties potentially reaching up to 10% of their global annual sales for first-time offenses. Repeat violations can lead to even larger fines, up to 20% of global sales, while daily fines for non-compliance can also be levied at 5% of average daily revenue. In Apple’s case, the company’s significant global sales mean the penalties could be substantial.

Apple’s recent quarterly results highlight its substantial revenue base. The company reported 94.9 billion dollars in sales for the fourth quarter, surpassing expectations. Revenue from the iPhone alone accounted for 46.2 billion dollars, further demonstrating Apple’s market power. The potential fine and the imposition of periodic penalty payments until the company complies with the DMA could be a major financial hit.

This development is part of a broader ongoing dispute between Apple and EU regulators, particularly under Vestager’s leadership. In the Spotify case, Vestager accused Apple of unfairly blocking its competitors by preventing them from advertising cheaper subscription deals to users, thus strengthening Apple’s position in the market.

In 2024, the EU compelled Apple to allow third-party services to access the iPhone’s payment chip. This ruling was a blow to Apple Pay, the company’s payment platform, and it opened the door for greater competition from banks and other financial services that had previously been unable to compete with Apple’s payment system.

The App Store case is another step in the EU’s ongoing effort to regulate Big Tech, with the DMA at the forefront of these efforts. The law, introduced in 2022, is designed to prevent the biggest tech firms from abusing their dominance in digital markets. It is part of the EU’s broader strategy to ensure that online platforms remain competitive and that consumers are protected from unfair business practices.

As the case progresses, Apple will likely face more pressure from EU regulators to comply with the DMA’s requirements. The outcome could have significant implications for Apple and the wider tech industry, as it could set a precedent for how the EU enforces digital market regulations moving forward. With the possibility of hefty fines and ongoing regulatory battles, Apple’s relationship with European regulators will likely remain contentious for the foreseeable future.