Apple’s Antitrust Woes: A Global Perspective
US Regulators Take Aim at Apple’s Mobile Monopoly
While Apple has long enjoyed a relatively light regulatory touch on its home turf compared to its Big Tech peers, the tide appears to be turning. The US Department of Justice (DOJ) has recently filed an antitrust suit accusing Apple of monopolistic practices in the high-end and US smartphone markets. The suit alleges that Apple engages in anti-competitive exclusion through a range of restrictions imposed on iOS developers and users.
This marks a significant shift in the regulatory landscape for Apple, as its competitors have faced antitrust scrutiny for years. Google has been battling monopoly cases since 2020, while Meta has been under the FTC’s microscope for a similar duration. Even Microsoft has a history of antitrust tangles with US enforcers dating back to its Windows era.
International Antitrust Challenges Mount
Apple’s antitrust troubles extend beyond US borders, with the company facing competition scrutiny and interventions in several other markets. The European Union, in particular, appears to be gearing up for increased antitrust activity targeting Apple’s mobile business, bolstered by recently rebooted competition rules.
In a notable case earlier this month, EU enforcers slapped Apple with a fine of nearly $2 billion over anti-steering provisions in the iOS music streaming market. The case, which stemmed from long-running complaints by music streaming platform Spotify, focused on Apple’s restrictions that prevented music streaming apps from informing users about cheaper offers available elsewhere.
The EU framed Apple’s actions as harmful to consumers, arguing that they lost out on potentially cheaper and more innovative music services due to the iPhone maker’s App Store restrictions. EVP and competition chief, Margrethe Vestager, summed up the decision:
Apple’s rules ended up in harming consumers. Critical information was withheld so that consumers could not effectively use or make informed choices. Some consumers may have paid more because they were unaware that they could pay less if they subscribed outside of the app. And other consumers may not have managed at all to subscribe to their preferred music streaming provider because they simply couldn’t find it.
A Tough Year Ahead for Apple
As antitrust activity ramps up globally, Apple appears to be facing a challenging year ahead. With regulators in the US and EU taking aim at the company’s mobile business practices, the smartphone giant will need to navigate an increasingly complex regulatory landscape.
The DOJ’s recent suit and the EU’s hefty fine serve as stark reminders that even the most successful tech companies are not immune to antitrust scrutiny. As the regulatory landscape continues to evolve, Apple will need to adapt its business practices to ensure compliance with competition laws and maintain its position as a leader in the global smartphone market.
EU’s Antitrust Enforcement Against Apple: A New Era Begins
Substantial Penalty Sends a Clear Message
The European Union’s recent €1.8 million fine imposed on Apple for anti-competitive practices in the music streaming market is a significant development. While the direct sales in question were relatively small, the EU enforcers added a substantial “lump sum” to the penalty to serve as a deterrent. As EU Competition Commissioner Margrethe Vestager explained:
A penalty of few millions of euros would have amounted to a “parking ticket” for a company as wealthy as Apple.
The EU’s rules for calculating antitrust fines allow for adjustments based on factors like the gravity and length of the infringement, aggravating circumstances, and the imposition of symbolic fines in some cases. While the exact basis for the increased penalty is unclear, the message to Apple is unequivocal: the era of light touch antitrust enforcement is over.
Adapting to Changed Times
Commissioner Vestager acknowledged that such deterrent penalties are rare in competition abuse cases, but emphasized the need for enforcers to keep developing their legal basis. She pointed to discussions about the importance of considering harm to innovation and choice in merger reviews, not just the impact on prices. Vestager stressed:
If you look at our antitrust cases, I think it’s also very important that we see the world as it is. We must ensure our actions are lawful, but our duty is also to be relevant for customers in Europe.
These remarks indicate that the EU’s competition machinery is shifting its approach, becoming more creative in its assessments to adapt to the changing landscape.
The Digital Markets Act: Driving Change
The EU’s Digital Markets Act (DMA), proposed by the Commission in late 2020, is a significant driver of this shift. The DMA was drafted in response to complaints that classic competition enforcements were too slow to prevent Big Tech from abusing its market power. Large portions of the regulation seem explicitly targeted at Apple, addressing issues raised by Spotify and other app developers regarding the company’s app store practices.
As of March 8, just days after the EU’s enforcement decision on the music streaming case, Apple is now banned from applying anti-steering restrictions to any iOS apps in the EU under the DMA. This New World order being imposed on Cupertino is far more significant than any single fine.
Ongoing Investigations and Overlap with DOJ Case
The EU has taken other actions against Apple as well. An investigation into Apple Pay, launched in 2020, is one area of overlap with the recent DOJ case against the company. In January, Apple offered concessions aimed at resolving EU enforcers’ concerns about how it operates NFC payments and mobile wallets, demonstrating the ongoing scrutiny the company faces in Europe.
As the EU continues to adapt its antitrust enforcement to the digital age, Apple and other tech giants will need to navigate an increasingly complex regulatory landscape.
Apple’s Evolving Ecosystem: Navigating Regulatory Challenges and Global Implications
Unlocking iOS Wallet Tech in Europe
In a significant move, Apple has taken steps to open up its wallet technology on iOS devices in Europe. The company has proposed allowing third-party mobile wallet and payment service providers to access the necessary iOS technology, enabling them to offer rival payment services on Apple’s mobile devices without incurring charges or being compelled to use Apple’s own payment and wallet technology. Additionally, Apple has committed to providing access to additional features that enhance the seamlessness of payments on iOS, such as its FaceID authentication method. The company has also pledged to apply fair criteria when granting NFC access to third parties.
US Antitrust Concerns and the European Precedent
US competition enforcers share similar concerns regarding Apple’s conduct in this domain. Notably, their filing acknowledges Apple’s efforts to open up Apple Pay in Europe, highlighting the absence of technical limitations in providing NFC access to developers seeking to offer third-party wallets. The US Department of Justice’s complaint even mentions Apple’s intention to allow users to set another app, such as a bank’s app, as the default payment app in Europe. This raises the question: if iOS developers and users in Europe are being granted these opportunities, why should their counterparts in the US be deprived of the same?
The Brussels Effect: EU Regulations Shaping Global Tech Landscape
As the European Union enforces its new behavioral rulebook on Apple, compelling the company to unlock and regionally open up various aspects of its ecosystem, such as allowing non-WebKit-based browsers and enabling iOS users to sideload apps, the potential impact on antitrust enforcements in the US becomes increasingly relevant. The “Brussels effect,” where the EU’s law-making priorities in strategic areas like digital technologies and platform power influence global regulation, could exert a growing influence on antitrust enforcements across the Atlantic. The divergence of opportunities available on major tech platforms, driven by the Digital Markets Act (DMA) and its emphasis on interoperability and data portability, may prompt US government lawyers to scrutinize Apple’s more restrictive practices on home turf.
Implications for the Land of the Free
It is unlikely that the US, often referred to as the “land of the free,” will be content with its citizens and developers experiencing less freedom on iPhones compared to their European counterparts. The notion of being treated as second-class users is likely to be met with resistance and dissatisfaction.
Apple’s DMA Compliance and Potential Investigations
While EU enforcers have yet to confirm whether Apple’s offer regarding Apple Pay addresses their concerns, they are currently engaged in a comprehensive review of the company’s entire DMA compliance plan. In the fall of 2023, Apple was designated as a “gatekeeper” under the DMA for iOS, the App Store, and its Safari browser. Consequently, multiple aspects of how Apple operates these platforms are under scrutiny, and formal investigations may soon follow. Some predict that DMA probes are likely, particularly in areas where criticisms persist. Apple appears to be the leading contender among the six designated gatekeepers for attracting claims of “malicious compliance” thus far, followed by Meta and Google.
Unbundling iOS Fees: A Key Focus
A crucial aspect of the EU’s assessment will be Apple’s decision to respond to the new law by unbundling the fee structure it applies on iOS. The company has introduced a 27% commission for apps that use non-Apple payment tech, in contrast to the standard 30% it charges for apps using its own in-app payment API. While this move has been met with criticism from some developers who argue that Apple is still exerting excessive control, the EU’s stance on this matter will be closely watched.
Apple’s DMA Compliance Efforts: Navigating the Challenges and Controversies
The Core Tech Fee Debate
As Apple strives to align with the Digital Markets Act (DMA), it has introduced a new “core tech” fee. This €0.50 charge applies to each first annual install per year exceeding a 1 million threshold for apps distributed outside the App Store. While the DMA does not explicitly regulate gatekeeper pricing or ban fee collection, it mandates fair, reasonable, and non-discriminatory (FRAND) terms for business users.
Critics Voice Concerns
A group of Apple critics, including Spotify and Epic Games, argue that the new fee is designed to deter developers from signing up for Apple’s revised terms and conditions, which are necessary to access DMA entitlements. In an open letter, they stated:
Apple’s new terms not only disregard both the spirit and letter of the law, but if left unchanged, make a mockery of the DMA and the considerable efforts by the European Commission and EU institutions to make digital markets competitive.
EU’s Watchful Eye
The European Union is closely monitoring Apple’s new fee structure. In a recent statement to Reuters, EU Commissioner Margrethe Vestager expressed her “keen interest” in ensuring that the fee does not undermine the attractiveness of using DMA benefits. The Commission is prepared to investigate this matter further.
Apple’s Concessions and Reversals
In response to EU pressure, Apple has made several concessions related to DMA compliance:
- Reversing the decision to block progressive web apps (PWAs) in Europe
- Making criteria concessions following developer complaints
- Reversing the decision to terminate Epic Games’ developer account
- Announcing plans to allow sideloading of apps in the coming weeks/months
The Road Ahead
As the DMA implementation unfolds, it remains to be seen how Apple will navigate the challenges surrounding its new core tech fee. The European Commission will likely need to intervene and provide clear guidance on the matter. Meanwhile, the U.S. Department of Justice’s complaint against Apple, which focuses on various restrictions imposed by the company, also touches upon the issue of fees and their impact on competition.
Apple’s Antitrust Woes: A Global Perspective
EU’s Digital Markets Act (DMA) and Its Implications
The European Union’s recently enforced Digital Markets Act (DMA) could spell trouble for Apple’s controversial “core tech fee”. The DMA prohibits certain behaviors by large tech platforms, and Apple’s fee structure might be seen as an attempt to “extract higher fees” and stifle competition. If the EU orders Apple to abandon this fee, it could prompt US antitrust enforcers to intensify their focus on Apple’s practices.
EU officials have indicated that DMA enforcement timescales could be a matter of days, weeks, or months, so corrective action should be swift. The DMA allows up to 12 months for a market investigation and six months for reporting preliminary conclusions. Given the regulation’s aim to enable faster and more effective interventions, a draft verdict on the legality of Apple’s core tech fee could be pronounced later this year if the EU moves quickly to open an investigation.
Germany’s Ex Ante Competition Reform and Its Impact on Apple
In April 2023, German competition authorities designated Apple as subject to their domestic ex ante competition reform, a status that applies to its business in Germany until at least 2028. Since mid-2022, the German Federal Cartel Office has been examining Apple’s requirement that third-party apps obtain permission for tracking. If they conclude that this practice harms competition, they could force changes on Apple’s practices in the near term.
Antitrust Challenges in South Korea and India
Apple has had to respond to antitrust restrictions in South Korea on its in-app payment commissions after the country passed a 2021 law targeting app store restrictions. In India, antitrust authorities have been investigating Apple’s practices in this area since late 2021.
Brewing Antitrust Trouble in the UK
The UK’s Competition and Markets Authority (CMA) has spent years scrutinizing how Apple operates its mobile app store, concluding in a final report in mid-2022 that there are substantive concerns. The CMA has since moved on to probes of Apple’s restrictions on mobile web browsers and cloud gaming, which remain ongoing.
In April 2023, the UK government announced it would press ahead with its own ex ante competition reform. This future law will enable the CMA’s Digital Markets Unit to proactively apply “pro-competition interventions” to dominant tech giants, potentially leading to further antitrust challenges for Apple in the UK market.
As antitrust scrutiny intensifies globally, Apple may face significant pressure to alter its business practices and fee structures in various markets. The coming years could bring substantial changes to the tech giant’s operations as it navigates an increasingly complex regulatory landscape.
UK’s Regulatory Crackdown on Tech Giants: Apple in the Crosshairs
The United Kingdom is gearing up to introduce tailored regulations targeting tech behemoths deemed to have “strategic market status,” eliminating the need for lengthy investigations to establish abuse of power. This approach aims to streamline the enforcement process and swiftly address anticompetitive practices.
Apple Likely to Face Tighter Restrictions
Given its dominant position in the market, Apple is almost certain to fall within the scope of the proposed UK regulatory framework. As a result, the company can expect to face increasingly stringent regional restrictions on its business operations in the near future.
Similarities and Differences with EU’s Digital Markets Act
The upcoming UK legislation may share some similarities with the European Union’s Digital Markets Act (DMA), as indicated by the Competition and Markets Authority (CMA). The CMA has suggested that the new rules could prohibit self-preferencing, mandate interoperability and data access/functionality requirements, and establish fairness standards for business terms.
However, the UK’s approach is not an exact replica of the EU’s DMA. The domestic regime is expected to provide UK enforcers with greater flexibility to customize interventions based on the specific platform. This means that Apple’s UK operations may face even more stringent constraints compared to those imposed by the EU.
Implications for Apple’s Legal Team
As the regulatory landscape continues to evolve, Apple’s in-house legal team can anticipate a substantial increase in their workload. The company will need to navigate the complexities of the new UK regulations while ensuring compliance with existing EU rules and other regional requirements.
The planned UK law may mirror elements of the EU’s DMA, as the CMA has suggested it could be used to ban self preferencing, enforce interoperability and data access/functionality requirements, and set fairness mandates for business terms.
In conclusion, the introduction of the UK’s bespoke rules targeting tech giants with “strategic market status” is set to intensify the regulatory pressure on companies like Apple. As the UK charts its own course in digital market regulation, Apple must prepare to adapt to an increasingly complex and demanding legal landscape.
1 Comment
Looks like Apple’s juggernaut might finally hit a speed bump, huh