The European Union has launched an investigation into Apple's decision to block video game company Epic Games from setting up its own app store, citing potential violations of the bloc's recently implemented digital rules. The move marks a fresh escalation in the high-stakes battle between the two companies, as Epic has spent years fighting Apple's exclusive control over the distribution of iPhone apps.

The European Commission, the EU's executive arm, has requested further explanations from Apple under the Digital Markets Act (DMA), which took effect in the 27-nation bloc on Thursday. The DMA requires Apple, as a designated "gatekeeper," to permit third-party app stores on its platform, with failure to comply risking penalties of up to 10% of global annual turnover.

"Epic's egregious breach of its contractual obligations to Apple led courts to determine that Apple has the right to terminate 'any or all of Epic Games' wholly owned subsidiaries, affiliates, and/or other entities under Epic Games' control at any time and at Apple's sole discretion,'" Apple said in a statement. "In light of Epic's past and ongoing behavior, Apple chose to exercise that right."

However, the EU regulators are not only examining Apple's actions under the DMA but also evaluating whether the company's decision raises doubts about its compliance with two other regulations: the Digital Services Act (DSA) and the Platform-to-Business Regulation (P2B). The DSA prohibits tech companies from "arbitrary application" of their terms and conditions, while the P2B regulation contains measures intended to boost platform transparency and curb unfair practices.

Epic contends that Apple brazenly violated the DMA by rejecting an alternative iPhone app store that it planned to set up in Sweden to serve European Union users. The game maker accused Apple of retaliating for scathing critiques posted by CEO Tim Sweeney, who spearheaded a mostly unsuccessful antitrust case against the iPhone App Store in the U.S.

In response to the EU's request for explanations, Apple referred to its previous statement, arguing that the termination of Epic's account is justified by a U.S. court ruling affirming its contractual right to do so. The company noted that the termination is not limited to the EU and that Epic's breach of the Developer Program License Agreement (DPLA) was implemented globally, including in Europe.

The ongoing dispute between Apple and Epic Games has far-reaching implications for the digital ecosystem, as the EU's regulatory framework seeks to promote fair competition and protect consumers' rights. The DMA, in particular, aims to level the playing field by preventing large tech companies from abusing their market dominance and allowing smaller players to compete on equal terms.

As the European Commission delves deeper into the matter, the outcome of this investigation could set a precedent for how the EU's digital regulations are enforced and how tech giants like Apple navigate the evolving regulatory landscape. The clash between Apple's assertion of its contractual rights and the EU's push for greater openness and competition in the digital market is likely to have significant repercussions for the future of app distribution and the broader tech industry.

With Epic Games continuing to litigate against Apple in the U.S. and Australia, the battle between the two companies shows no signs of abating. As regulators on both sides of the Atlantic grapple with the complexities of the digital economy, the resolution of this dispute will be closely watched by industry players, policymakers, and consumers alike.