German regulator charges Apple with abuse of power over app tracking tool

BERLIN (Reuters) - The German antitrust authority has charged Apple with abusing its market power through its app tracking tool and giving itself preferential treatment in a move that could result in daily fines for the iPhone maker if it fails to change its business practices.

The move follows a three-year investigation by the Federal Cartel Office into Apple's App Tracking Transparency feature, which allows users to block advertisers from tracking them across different applications.

The U.S. tech giant has said the feature allows users to control their privacy but has drawn criticism from Meta Platforms, app developers and startups whose business models rely on advertising tracking.

"The ATTF (app tracking tool) makes it far more difficult for competing app publishers to access the user data relevant for advertising," Andreas Mundt, cartel office president, said in a statement.

Apple defended the feature in an emailed statement to Reuters, adding that it "holds itself to a higher standard than it requires of any third-party developer."

"We ... will continue to constructively engage with the Federal Cartel Office to ensure users continue to have transparency and control over their data," it added.

Apple will be required to address the concerns set out in the German charge sheet or risk further proceedings and daily fines if it fails to do so by the time of a final ruling which could come this year but is more likely to land next year.

The case was triggered by complaints from associations representing publishers, broadcasters, advertisers, their agencies and ad tech firms.

"Today's charges are groundbreaking. Apple's measures had created an artificial opacity in its ecosystem that led to less choice, higher costs for apps, and less protection against ad fraud, all while boosting Apple's revenues from services," said Thomas Höppner, partner at law firm Hausfeld, which represents the complainants.

"For the first time it has been clarified that Apple may not rely on pretextual privacy arguments to massively restrict competition in its favor," he said.

Companies found guilty of breaching Germany's antitrust rules risk fines as much as 10% of their annual turnover.

(Reporting by Rachel More in Berlin and Foo Yun Chee in Brussels, editing by Thomas Seythal and Elaine Hardcastle)