Regulatory Clouds Are Mounting Over Apple

On Monday, EU regulators found that Apple Inc AAPL violated the Digital Markets Act due to its lucrative App Store by illegally blocking software developers from telling customers how to access content outside the app store. Regulators also revealed that they opened a separate investigation into Apple’s practice of charging a "core technology fee" for iOS apps available in the EU. Apple responded that it is confident that the changes it made in the EU comply with the DMA.

Meanwhile, in the U.S., Apple is defending itself against antitrust charges made by the US Justice Department and 16 state attorneys general. In March, they sued Apple for using illegal tactics to hold on to a monopoly in the smartphone market.

The new law designed to rein in tech giants and limit their power is already starting to give Big Tech legal headaches. 

The Digital Markets Act that went into effect in March aims to limit the monopoly power that Apple, Amazon AMZN Alphabet GOOGGOOGL, Microsoft Corporation MSFT, ByteDance, and Meta META enjoy by imposing more restrictive rules around competitive practices. Apple was the first of the tech titans to receive a claim for breaching the DMA by blocking developers from communicating alternative ways to purchase their content.

Altogether, the European Commission has significantly raised the financial risks that Apple faces from global antitrust regulators. As a reminder, Apple already lost to Spotify SPOT who accused it for abusing its market dominance in the distribution of music streaming apps, and is appealing the court’s decision and consequent $1.95 billion fine. Besides evaluating Apple’s lack of compliance with giving users the freedom of choice and its steering rules, the EC is going after Alphabet to evaluate its measures to prevent self-preferencing the Google search engine over others as well as its steering rules as well. The EC wants to make sure that Alphabet implemented measures to for Google search rivals to be treated in a fair and non-discriminatory manner. 

EU watch dogs are also going after Meta for its pay or consent” model. As a gatekeeper, the EC is concerned about Meta being a responsible gatekeeper. EC wants to prevent the accumulation of personal data by gatekeepers and will question if Meta is obtaining consent from users when intending to combine or cross-use their personal data across different core platform services.

Since enforcing the Digital Markets Act, the EC is showing that it will make sure that Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft fully comply with the rules. Although this is still a small step to holding the tech titans accountable for their actions, it is a big step in ensuring fair competition in the digital economy and regulating gatekeepers. With Apple, the EC clearly showed it means business.

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