THE CORE BITE: APPLE'S ANTITRUST CRUNCH UNDER EU'S NEW DIGITAL RULES

By the standards of Big Tech firms, Apple leads the way on innovation, consumer loyalty and market control. But its behaviour has also come under scrutiny, especially against the background of its App Store policies. With Apple facing a case this week representing one of the first major legal battles under the EU’s groundbreaking Digital Markets Act (DMA), which aims to regulate Big Tech in the digital marketplace, the eye of the competition and consumer choice storm could not be more squarely focused on the first of the Big Tech giants.

THE EU'S ANTITRUST APPLE: A CLOSER LOOK AT THE CHARGES

Brussels isn’t just shooting arrows at a random tree; it is going after what it considers the biggest apple in the tree, Apple Inc. The company is accused of preventing competition for its mobile app market, allegedly creating entry barriers and charging high fees for app developers seeking to drive users toward payment outside of the App Store. If the charges have merit, the company might have to pay a fine that would put a dent in its fat profit.

APPLE'S APP STORE UNDER THE MICROSCOPE

At stake in the EU’s case, however, is the lion’s share of that economy: Apple’s App Store, the heart of the iPhone ecosystem where users go to download apps. Among the European Commission’s complaints is that the tech giant wields too much control over transactions that take place on the App Store – like forcing app developers to sell their in-app content through Apple’s payment system, which charges a fee.

THE DIGITAL MARKETS ACT: AN OVERVIEW

By virtue of the DMA, the EU is creating the original conditions of digital marketplaces for certain companies it defines as ‘online gatekeepers’: Apple, Alphabet (the parent of Google) and Meta (formerly Facebook) are currently under investigation to make sure they don’t take unfair advantage of their market power to block competition. The DMA is one of the EU’s commitments to ensuring a competitive digital economy that is open and fair.

APPLE’S MOVES AND COUNTER-MOVES

To appease this further level of scrutiny, Apple announced in early 2022 a series of changes to its iOS mobile software, App Store and Safari browser that would shift its business in the EU closer to the confines dictated by EU regulators. That includes allowing access to third-party app stores and reducing fees imposed by Apple on digital goods and services. Now, with new charges – such as Apple’s latest so-called ‘core technology fee’ and an additional charge for using its payment processor – leading some app developers to complain that these could lead to even higher expenses.

GLOBAL EYES ON APPLE

It wasn’t an isolated case. Antitrust authorities around the world have been taking a glare off Big Tech’s business practices. An antitrust lawsuit about the operations of Apple’s App Store in the US shows how markets across the world are trying to resolve tension over how businesses can promote innovation and market leadership while securing fair competition.

THE DEVELOPERS' DILEMMA: NAVIGATING THE APP STORE'S ORCHARDS

For app developers, Apple’s platform provides a lucrative opportunity to reach hundreds of millions of iPhone and iPad users. But the European Commission’s charges against Apple also highlight for many the barriers that they face, including high fees and unyielding rules that can limit creativity and competition.

CONSUMER CHOICE IN THE DIGITAL MARKETPLACE

At the heart of the EU’s claims, however, is a concern about consumer choice. If Apple were to discourage users from finding apps outside of the App Store, or to prevent them from using payment methods other than Apple’s own commission-heavy proprietary system, it would arguably be undermining the range of options available to users, and in turn innovation and competition.

A BITE OF THE FUTURE: WHAT'S NEXT FOR APPLE AND THE APP STORE?

It is in the company’s response, and the ways it adapts in the period ahead, that we will see if the EU’s charges herald the beginning of a new era of digital market regulation. Apple is far from doomed, and there will be no shortage of attempts to skirt, stymie and undo these charges. Its run of ‘innovation’ that coincided with its unchecked power – bulling both partners and its own users – might not have ended, even if the legal process is underway. Apple’s efforts to avoid the EU’s charges create the potential for new precedents for all digital marketplaces organized around innovative sellers, and consumer ‘choice’.

DECODING APPLE: A TECH TITAN IN SUMMARY

Apple Inc is an American technology multinational corporation, whose iconic logo and innovations such as the iPhone, iPad and MacBook have made it one of the most valuable companies in the world. Its business model and approach have set the standard for the computer industry and include the distribution of digital content through its App Store. Although Apple is one of the most innovative and successful tech companies of all time, its business practices and market dominance have been controversial. Struggling with globally unified regulatory standards and antitrust charges, Apple has changed the world of digital technology and commerce.

The drama of Apple’s battle with the EU’s new digital rules is so much bigger than the legal matter at hand. This is a story about a global order of technology that is in flux. It is also about the promise of a balanced digital economy, where innovation can thrive in tandem with healthy levels of competition and consumer choice. This emerging story matters, because it could become a kind of bell-weather in the predictive account of where the sweet usufruct of innovation lives alongside the public goods of an open market.