Regulators in the EU are investigating whether Apple (NASDAQ:AAPL) is in violation of the European Union’s Digital Markets Act (DMA) for not allowing App Store customers to search for alternatives. Additionally, the European Commission has launched a new investigation into Apple’s contractual terms with developers.
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Details of the EU’s Probe
Earlier this year, the EU began investigating Apple, Alphabet (NASDAQ:GOOGL), and Meta (NASDAQ:META) under the Digital Markets Act (DMA), which aims to curb Big Tech’s power. The probe focuses on whether these tech firms blocked businesses from informing users about cheaper alternatives or subscriptions outside of app stores.
EU regulators stated that Apple had breached the DMA “subject to several restrictions imposed by Apple that prevent app developers from communicating, promoting offers, and concluding contracts through the distribution channel of their choice.”
Moreover, regulators stated that Apple’s fees for acquiring new customers through the App Store “go beyond what is strictly necessary.” If found violating the DMA, Apple could face fines of up to 10% of its global annual revenue.
Investigation into Apple’s Contractual Terms with Developers
In anticipation of the DMA coming into effect, Apple made significant changes to its App Store earlier this year. As part of these changes, Apple now allows apps to be downloaded from websites and third-party app stores on its devices.
However, the European Commission has concerns about some practices, including a “core technology fee” of €0.50 ($0.54) per app installed for downloads outside the App Store. Regulators are investigating whether this fee and the steps required to download alternative app stores or apps comply with the DMA. The Commission is also examining the eligibility requirements for offering alternative app stores or distributing apps directly from the web on iPhones.
Is Apple a Buy, Sell, or Hold Stock?
Analysts remain cautiously optimistic about AAPL stock, with a Moderate Buy consensus rating based on 23 Buys, 11 Holds, and one Sell. Over the past year, AAPL has increased by more than 10%, and the average AAPL price target of $212.41 implies an upside potential of 2.4% from current levels.
