German antitrust proceedings against Apple have been initiated by the Bundeskartellamt (Federal Cartel Office). The main focus is on the App Store, but the competition regulator is also examining the broader impact of the Apple ecosystem, such as pre-installed apps and the treatment of services that compete with Apple (like Spotify).
Apple is the fourth tech giant to come under investigation since a new antitrust law came into effect in January …
The Bundeskartellamt explains that the new law allows it to intervene at an earlier stage than was possible previously.
In January 2021, the 10th amendment to the German Competition Act (GWB Digitalisation Act) came into force. A key new provision (Section 19a GWB) enables the authority to intervene earlier and more effectively, in particular against the practices of large digital companies. In a two-step procedure the Bundeskartellamt can prohibit companies which are of paramount significance for competition across markets from engaging in anti-competitive practices.
The office has previously used these powers to open investigations into Facebook, Amazon, and Google.
The Bundeskartellamt said that it would liaise with the European Commission’s parallel investigation into some of the same issues – in particular, complaints about Apple’s handling of the App Store.
Based on this first proceeding, the Bundeskartellamt intends to assess in more detail specific practices of Apple in a possible further proceeding. In this regard, the authority has received various complaints relating to potentially anti-competitive practices.
These include, among others, an association complaint from the advertising and media industry against Apple restricting user tracking with the introduction of its iOS 14.5 operating system, and a complaint against the exclusive pre-installation of the company’s own applications as a possible type of self- preferencing prohibited under Section 19a GWB.
App developers also criticise the mandatory use of Apple’s own in-app purchase system (IAP) and the 30 percent commission rate associated with this. In this context, the marketing restrictions for app developers in Apple’s App Store are also addressed.
The latter complaint has much in common with the European Commission’s ongoing proceeding against Apple for imposing restrictions on the streaming service Spotify and accordingly preferencing its own services. Where necessary, the Bundeskartellamt will establish contact with the European Commission and other competition authorities in this regard.
This move again highlights a key difference between US and European antitrust law. In the US, it’s generally the case that the government has to prove that consumers have been harmed by anti-competitive behaviors. In Europe, governments have the power to act when anti-competitive behavior is proven, and there is potential for consumers being harmed in the future. The German antitrust proceedings are based on that approach, and seek to head off consumer harm before it occurs.
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