Key Takeaways
Overview
On May 26, 2025, the European Commission (Commission) published the nonconfidential version of its decision from April 23, 2025, finding that Apple’s restrictions on steering breach Article 5(4) of the EU Digital Markets Act (DMA) because Apple does not allow business users to freely communicate, promote offers, and contract with end users through alternative distribution channels.
The decision sets out the Commission’s interpretation of the scope of Article 5(4) DMA. Notable themes include the following:
- Article 5(4) obliges gatekeepers to proactively enable steering (contractually and technologically). It is not enough to merely provide the “effective possibility” of steering by not impairing, hindering, or constraining steering (as might be sufficient to comply with Article 102 of the Treaty on the Functioning of the European Union (TFEU)).
- The Commission did not accept that the novelty of the DMA regime justifies the omission of a fine. The decision makes it clear that the Commission sought to work with Apple to facilitate its understanding of the DMA regime both before and during the investigation.
- Apple’s noncompliance was considered “serious” given its EU-wide impact, the significant number of affected end and business users, and Apple’s size and significant economic power. Given that these are factors that led to Apple’s designation as a gatekeeper in the first place, the Meta “pay or consent” and subsequent decisions will be necessary to enable gatekeepers and business/end users alike to identify the deliberate and considered behavior that constitutes a serious infringement.
Background
Apple was designated as a gatekeeper in connection with its App Store core platform service (CPS) in September 2023. This triggered a six-month period for Apple to comply with the DMA by March 6, 2024.
Having engaged with Apple prior to March 6 and reviewed its compliance report, on March 25, 2024, the Commission opened an investigation regarding potential noncompliance by the App Store with the Article 5(4) requirement that gatekeepers allow business users to (1) freely promote and choose their distribution channel; (2) promote offers and engage in “any form of communication”; and (3) conclude contracts with end users, regardless of whether they do so via the CPS or other channels. In connection with such “steering,” gatekeepers should only be remunerated for “matchmaking” (i.e., for facilitating the initial acquisition by the business user of the end user).
In June 2024, the Commission issued its preliminary findings that the App Store rules breached Article 5(4) because they prevent app developers from freely steering end users to alternative distribution channels.
The Decision
The Relevant App Store Rules
The decision considers three sets of business terms:
- The “Original Business Terms,” which prohibit app developers from directing end users to offers outside apps to conclude contracts. Apple charges a commission of 30% (or 15% for certain developers) for in-app purchases, which must use the App Store payment service (IAP), and prohibits developers from steering end users to alternative offers.
- The “New Business Terms,” which provide for (1) a commission fee on purchases made in or outside the app within seven days of an end user linking out; (2) a 3% commission fee on any in-app purchases for transactions using Apple’s IAP (where app developers who offer steered transactions cannot also use Apple’s IAP); and (3) an annual “Core Technology Fee” (CTF) for all apps, whether distributed through the App Store or alternative channels. They also impose conditions (discussed below) on app developers regarding the accessibility and utility of link-outs and display a “scare screen” telling end users that they will not transact with Apple on the destination page.
- The “New Music Streaming Business Terms,” which provide for a 27% commission fee on purchases made outside the app within seven days of an end user linking out (including subsequent auto-renewals of subscriptions initiated in that initial window). Further, music streaming app developers are subject to other conditions like those imposed under the New Business Terms, with certain differences tailored to music streaming transactions.
App developers can remain under Apple’s Original Business Terms or opt to use alternative distribution (requiring that they use Apple’s New Business Terms) or, if they provide music streaming services, its New Music Streaming Business Terms.
Substantive Assessment and Apple’s Main Counterarguments
The decision finds that Apple limits app developers from distributing apps to end users through other channels. It concludes that all three sets of business terms breach Article 5(4). The Original Business Terms prohibit app developers from using any kind of steering. The New Business Terms (and the New Music Streaming Business Terms) do not prohibit, but in various ways restrict, app developers from steering end users to offers outside apps.
Apple argued that it could continue to offer a set of noncompliant terms as long as it also offered a set of compliant terms. The Commission made a point of rejecting this argument, even though none of Apple’s sets of business terms comply with Article 5(4). The Commission emphasized that each set of business terms must individually comply with Article 5(4), noting that “[i]t would defeat the purpose of [the DMA] to allow a gatekeeper to maintain any such unfair practices on the basis that its users would have elected to submit to such practices.”
The central point of divergence between Apple and the Commission over the New Business Terms relates to the scope of Apple’s obligation to facilitate steering:
- Apple appears to be interpreting the scope of the Article 5(4) as though it is an obligation similar to that imposed by Article 102 TFEU—namely, not to impair, hinder, or constrain competitors. Apple argued that it only has to provide the “effective possibility” for app developers to communicate, promote offers, and contract with end users outside the App Store, characterizing the Commission as seeking to “enlarge the scope of a straightforward provision into a much more complex means of control over the App Store – preventing Apple from exercising any control over the means or content of communications / promotions, and going beyond that, to require technical facilitation to enable contracting and a ‘seamless’ user experience” (para. 64).
- The Commission takes the position that Article 5(4) obliges Apple to proactively enable steering by implementing contractual and technological means that facilitate convenient interactions between app developers and end users. Steering should not just be “theoretically permitted.” In practice, Apple should enable business users to steer acquired end users (including through contractual or technical means). As explained in recital 40 DMA, app developers “should be able to choose and promote the distribution channel of their choice and engage in any form of communication and promotion” (para. 75).
These fundamentally different interpretations of the nature of the obligations under Article 5(4) are at the heart of the assessment of the various New Business Terms provisions. The Commission found that those provisions make steering unduly difficult for app developers, degrade the user experience, and disincentivize end users from using alternative distribution channels:
- Enabling link-outs only to the app developer’s website increases the number of steps that an end user must take before being able to navigate to a specific offer that is promoted by an app developer elsewhere than on its own website. The Commission rejected Apple’s arguments centered on risks to security and privacy of offers outside the App Store environment.
- Prohibiting routing a link-out to a web view in an app restricts app developers from leveraging a technology to display web content more conveniently for end users. The Commission rejected Apple’s argument that web views would lead to “consumer confusion.”
- Restricting the inclusion of data in the URL prevents app developers from pre-populating fields in the page to which end users link out, such that end users must re-enter the data (e.g., to make a payment outside the app), creating unnecessary friction for the transaction. Here, too, the Commission rejected Apple’s arguments relating to data privacy.
- The display of a “warning prompt” with wording that is “not neutral and objective” deters end users from using alternative distribution channels. The Commission rejected Apple’s argument that the “scare screen” was meant to “help [end users] make an informed decision” (para. 110), as the formulation and frequency of the “message, while not serving its alleged purpose, can discourage end users to conclude steered transactions with app developers” (para. 126).
In addition to those technical restrictions, the Commission found that the CTF amounts to a fee charged for steered transactions which goes beyond mere remuneration for initial matchmaking. It noted that a commission fee should “(i) be related both in time and in scope to the initial acquisition; (ii) be commensurate to the initial value of the matchmaking function and must take into account any direct or indirect remuneration received from business users for facilitating the initial acquisition; and (iii) not remunerate the gatekeeper for its gatekeeper value” (para. 193).
Composition of the Fine
The Commission characterizes the €500 million fine as representing “a relatively small proportion of Apple’s annual worldwide turnover (approx. 0.14 %) and in any event significantly less than the maximum fine cap of 10%” (para. 308). The following factors in the Commission’s fining methodology are noteworthy:
- Intent. Contrary to Apple’s claims, the Commission found that Apple has acted at the very least negligently, “as it could not have been unaware” that the relevant measures did not comply with Article 5(4) (para. 269). This point partly relates to the investigatory procedure. Apple criticized the “highly complex approach” of the preliminary findings and the Commission’s “lack of clarity and vague explanations” during the investigation (para. 268). The Commission states that it went beyond its legal obligation to provide written guidance on its interpretation only in the preliminary findings and discussed Apple’s implementation of its obligations with Apple on numerous occasions. Despite recurrent feedback indicating that the New Business Terms do not comply with Article 5(4), Apple made no substantial changes to them.
- Novelty. The Commission rejected Apple’s argument that the novelty of the DMA and the fact that this was one of the first noncompliance investigations justify not imposing any fine at all. As in several other points in the decision, the Commission relies on established antitrust precedent, noting that the fact that “the Commission and the EU Courts have not yet had the opportunity to rule specifically on particular conduct does not preclude, in itself, the possibility that an undertaking may have to expect its conduct to be declared incompatible,” which “is therefore not such as to exempt the undertaking concerned from its liability” (para. 275, citing Altice).
- Gravity. The Decision describes Apple’s noncompliance as serious since the conduct covers the whole of the EU and potentially affects a significant number of end users (i.e., on average, approximately 130 million App Store users) and app developers. The Commission notes that “Apple can be regarded as a very large company with significant economic power” (para. 286). While those factors understandably affect the gravity of an infringement, they are taken into account in the gatekeeper designation itself. As a result, further decisions will be necessary to build up an understanding of the deliberate and considered behavior that makes noncompliance by a gatekeeper serious.
Next Steps
The Commission orders Apple to bring the noncompliance effectively to an end within 60 days of being notified of the decision, specifically by (1) ensuring effective communication, promotion of offers, and conclusion of contracts and (2) enabling the conclusion of contracts “free of charge.” If it fails to do so, the Commission will impose periodic penalty payments. It is worth noting that Apple announced on August 8, 2024, possible changes to the New Business Terms governing steering. However, those changes have not yet been implemented and were not covered by the decision. As a result, it is not clear that these changes would bring Apple into compliance.
Apple has publicly stated that it intends to appear against the decision.
The Commission has conducted and continues to pursue other investigations of Apple for potential noncompliance, focusing on interoperability, app distribution, and browser engine restrictions. In March 2025, it issued two decisions clarifying Apple’s obligations regarding iOS device connectivity and interoperability with iPhone and iPad features.
The Commission also recently shared its preliminary findings that Apple fails to comply with its obligation to allow third-party app stores on iOS and direct distribution from the web in view of the conditions it imposes on app (and app store) developers. Finally, the Commission opened but subsequently closed another investigation concerning user choice obligations in iOS following Apple’s change to its browser choice screen and improvement of the user experience in setting a new default iOS browser.
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