Apple faces the first EU penalty under the bloc's Digital Markets Act

(Bloomberg) — Apple Inc. faces its first fine under the European Union's new digital antitrust rules against Big Tech, marking an escalation in the conflict with regulators over the dominance of its highly profitable App Store.

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Regulators are preparing the penalty after the iPhone maker failed to direct app developers to cheaper deals and deals outside the App Store, according to people familiar with the case who spoke on condition of anonymity.

The penalty under the tough new Digital Markets Act comes just months after Apple, based in Cupertino, California, was slapped with a 1.8 billion euro ($2 billion) fine for similar violations of the company's traditional competition rules Union can be imposed – including on music streaming services Spotify.

The EU Commission could impose the fine before the current EU competition commissioner, Margrethe Vestager, leaves office later this month, people said.

But there is a possibility it could be postponed until later this year, they said. The fine could also be accompanied by regular penalties imposed on Apple until it complies with the law, the people said, adding that the decision was still being worked out.

Apple spokespeople did not immediately respond to a request for comment. The European Commission declined to comment.

The move follows a warning to Apple in June that it must provide developers with effective tools to keep users away from the App Store or face future penalties. Unlike traditional antitrust law, the DMA is designed to prevent anti-competitive behavior before it is too late to ultimately ruin markets.

Under the law, EU regulators have the power to fine the world's most powerful tech companies 10% of their global annual turnover, 20% for repeat violations, or regular fines of up to 5% of average daily turnover.

In fourth-quarter results released last week, Apple reported revenue of $94.9 billion, compared to an average estimate of $94.4 billion. iPhone sales totaled $46.2 billion, beating estimates of $45 billion.

Apple shares rose less than 1% to $223.45 in New York on Tuesday. They are up 16% this year.

During her time in Brussels, Vestager had contact with Apple several times. In the Spotify dispute, she accused Apple of preventing its competitor from informing users about cheaper offers outside of Apple's App Store.

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