EU Threatens Apple Of 'Strong Action' Over App Store Modifications: 'We Will Not Hesitate'
Portfolio Pulse from Ananya Gairola
The EU has warned Apple Inc. (AAPL) of potential severe consequences if the company's App Store changes do not comply with the upcoming Digital Markets Act (DMA). Apple is modifying its App Store to allow developers to use alternative stores and payment systems, avoiding Apple's up to 30% commission. Despite these changes, the EU's industry chief Thierry Breton has criticized them as potentially inadequate and has threatened strong action if they don't meet the DMA standards. Apple will still charge a 'core technology fee' and require apps to be submitted for review. The changes could affect developers' costs, with companies like Meta Platforms potentially facing millions in yearly payments.
January 27, 2024 | 7:38 am
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Apple Inc. faces potential severe consequences from the EU if its App Store changes do not comply with the DMA. The company is allowing alternative app stores and payment systems, but with a 'core technology fee' and mandatory app review. The impact on Apple's revenue is uncertain, with previous predictions suggesting minimal effect.
While the EU's warning indicates potential legal and regulatory challenges for Apple, the actual impact on the stock price is uncertain. Previous analysis by JP Morgan suggested that the changes might not significantly affect App Store revenue. However, the threat of 'strong action' from the EU could create uncertainty among investors, potentially leading to short-term volatility. The 'core technology fee' may mitigate some revenue loss, and Apple's assertion that 99% of developers would keep or lower their fees suggests confidence in the financial impact of the changes.
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