A digital regulation in the European Union has failed to result in lower costs for consumers as American technology companies continue facing punishment under the European bloc’s antitrust legislation, according to a study released Wednesday.
The new study, commissioned by Apple and conducted by the Analysis Group, finds the EU’s Digital Markets Act does not fulfill its stated goal to reduce app prices. The study’s author finds very little evidence that the regulation leads to economic benefits for consumers.
The study discovered that while app developers are paying commission rates to Apple 10 percentage points lower than normal, the drop does not result in lower subscription prices for app users most of the time.
For example, if the commission rate decreases from 30% to 20%, the developer does not pass on its commission savings to consumers, who end up paying the subscription at the same price or higher. Developers did this for 91% of their products, according to the study’s findings. Of the remaining 9%, developers lowered prices no higher than five cents for about 2 out of every 10 products.
Apple says this phenomenon resembles its past experience after launching the Small Business Program, which reduced commission rates by half for smaller developers, starting in 2021.
“Less than 5% of those developers’ apps exhibited any price decreases whatsoever after their commission rates decreased,” according to the study. “Similarly, when Apple reduced the commission rate from 30% to 15% for all auto-renewable subscriptions after one year, developers decreased prices for only a small minority of subscriptions.”
The reduced commission payments follow Apple’s adoption of alternative business terms last year in response to the DMA. The law classifies Apple as one of six “gatekeepers” because of its market dominance in the tech industry, particularly concerning the iPhone and App Store, and requires the company to pave the way for more competition in the digital sector.
Apple’s alternative business terms allowed enrolled EU developers to pay lower fees on their sales if they stuck with the App Store instead of using alternative app marketplaces.
The commission savings for developers amounted to 20.1 million euros in the three months following the agreement of the terms. More than 86% of those savings went to non-EU developers.
“The DMA has failed to live up to its promises, delivering less security, less privacy, and a worse experience for consumers across Europe,” an Apple spokesperson said in a statement provided to the Washington Examiner. “This study provides further evidence that the DMA is not benefiting consumers in the form of lower prices. At the same time, we know the regulation is creating new barriers for innovators and startups while exposing consumers to new risks.”
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The DMA has been under scrutiny as various studies show the economic toll and logistical hurdles that the law imposes on tech companies based in the United States. In one study, the Computer and Communications Industry Association estimated the cost to comply with the DMA for U.S. companies could amount to $1 billion per year. With all of the EU’s tech regulations combined, the economic losses could total up to an annual $100 billion.
Apple has been outspoken after the EU fined the company 500 million euros for alleged DMA violations. The tech giant appealed the fine, but recent news reports indicate a settlement in the case is close. Apple previously argued the regulation should be repealed or modified.
