July 29, 2024

Apple’s App Store hit with antitrust probe in Spain

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Apple has a fresh antitrust headache in Europe: Spain’s competition authority, the CNMC, announced the opening of an investigation into Apple’s App Store Wednesday, citing concerns the iPhone maker could be imposing unfair trading conditions on developers who use its store to distribute their software to iOS users.

Few details about the substance of the CNMC’s concerns have been made available, but in a press release the authority writes [in Spanish; this is a machine translation] that: ‘Apple may be engaging in anti-competitive practices by imposing unfair trading conditions on developers who use Apple’s App Store to distribute applications to users of Apple products.’

The outcome of the Spanish authority’s probe, which could take up to two years to complete, remains to be seen. But if the CNMC confirms a breach of competition rules Apple could be on the hook for a penalty of up to 10% of its global annual turnover, worth billions of euros.

Developer complaints about how Apple operates its App Store have been a regular feature of iOS for years, including over the level of fees the company charges for in-app sales and use of its payment tech; and around Apple’s decision-making process for app review and wider App Store governance, with the company facing accusations of arbitrary and unfair decisions from some developers.

For its part, Apple claims it applies clear and consistent rules to iOS developers aimed at ensuring the App Store provides a safe and high quality experience for mobile users. Apple also claims the vast majority — more than 90% — of app store revenues (billings and sales) accrues to developers without it collecting any commission.

Responding to the CNMC investigation, Apple spokesperson Emma Wilson provided a statement, in which the company said it would ‘continue to work with the Spanish Competition Authority to understand and respond to their concerns.’

In recent years, European antitrust enforcers have been more willing to step in and challenge Big Tech, which has seen regulatory woes stacking up for Apple. That includes a €1.84 billion EU antitrust fine issued back in March over anti-steering related to music streaming apps; and a settlement deal earlier in July that is forcing Apple to open up contactless payments on iOS.

The advent of new competition rules in Europe is also bringing the iPhone maker fresh headaches. Earlier this year, its App Store went under investigation by the European Commission over suspected non-compliance with the bloc’s Digital Markets Act (DMA), an ex ante competition reform that applies across the EU and also bakes in meaty penalties — up to 10% turnover or even more — for failing to stick to the rules.

Last month, the Commission announced preliminary findings that Apple’s anti-steering rules breach the regime. The Commission also opened an additional investigation on Apple over a new fee — also known as the Core Technology Fee (CTF) — that it applies to developers accepting the version of its business terms that allows them to tap into DMA entitlements. That Commission probe remains ongoing.

Additionally, the EU has said it’s investigating how Apple has complied with a DMA requirement to allow third-party app stores.

Developers have argued the tech giant has made it tricky for iOS users to download and use these alternative marketplaces compared to the native experience of accessing Apple’s own App Store, which they reckon runs counter to what the DMA intends. Again, it will be up to the Commission to arbitrate.

Plus more regional special abuse controls look to be looming for Apple as the U.K. is set to pass its own Big Tech-focused competition reform.

And with all this antitrust action targeting Apple’s treatment of ecosystem developers litigation funders are also circling.

Reference: https://techcrunch.com/2024/07/24/apples-app-store-hit-with-antitrust-probe-in-spain/

Ref: techcrunch

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