Antitrust Overview Updated September 1, 2022

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January 2012 - December 2022

Apple faces antitrust worries

What does antitrust mean?

In most jurisdictions around the world, it is illegal for large companies to band together to form agreements or “trusts” to behave in a particular way – for example, to all sell their products for the same high price. Laws designed to outlaw this type of behavior are called antitrust legislation.

However, the term is used more generally to refer to laws designed to prevent companies from engaging in any kind of anti-competitive action – that is, do anything that would tend to artificially distort competition within a market.

One common myth is that antitrust laws only apply to monopolies. This is very much not the case: They apply to any company large enough to have a dominant position in any market. As we shall see below, the definition of the word “market” can be crucial to deciding whether antitrust concerns arise.

Why is Apple facing antitrust investigations?

First, Apple is a very large company, and it would be very easy for a company of that size to commit antitrust violations, so it is to be expected that any massive corporation would be put under the antitrust microscope.

But in Apple’s case, there are some more specific concerns based on the company”s market dominance in particular areas. These are addressed below.

What are the antitrust concerns with Apple?

There are a number of different ones, in areas as diverse as ad tracking and Sign In With Apple, but here are three of the main ones.

The App Store

The biggest antitrust concern is the App Store.

Apple argues that it does not have a dominant position in this market, as it considers the relevant market to be either “smartphones” or “apps.” Since the company holds a minority share of the smartphone market in most of the countries in which it operates, it believes it cannot be considered to have a dominant position.

Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution. Edge cases aside, there is no way for a developer to bring an iOS app to market without selling it through the App Store.

Companies like Epic Games argue that they should be allowed to sell in-app purchases without Apple taking a cut of their revenue. The argument here is that Apple harms developers by taking part of their income, and consumers by forcing developers to charge more to make up for Apple’s cut. Apple, in response, says that it is perfectly normal for a company to take a cut of the sales it facilitates.

Default apps

Additionally, some companies accuse Apple of anti-competitive behavior by giving its own apps advantages over third-party ones.

One way that Apple does this, they say, is by pre-installing its own apps. For example, when the Apple Weather app is already installed on an iPhone when you buy it, then Apple’s own app has an obvious advantage over a competing app.

There is overlap here with the App Store concerns. For example, Apple Music and Spotify are competitors, but not only is Apple Music preinstalled, you can subscribe from within the app. If Spotify offered this same ability, it would have to pay Apple a 30% cut. Spotify can’t afford this, so users are forced to take a more long-winded route to subscription, which gives Apple Music an additional competitive advantage.

Relationships with carriers and retailers

Apple has also been found guilty in more than one country of exploiting a dominant position within the smartphone market to place undue demands on carriers and retailers.

Because the popularity of iPhones meant carriers had to sell them, Apple was able to dictate terms. In South Korea, for example, it was accused of imposing three onerous conditions on local carriers:

  • Carriers had to buy minimum quantities of each model, dictated by Apple
  • Carriers had to share the cost of warranty repairs or replacements
  • Carriers had to pay to run Apple’s own TV ads for the iPhone

Budget-focused carriers might, for example, want to buy only older and cheaper models, as that’s what their customers want, but Apple would force them to buy flagship models, too. And if a phone proved faulty, Apple wouldn’t just replace it, but would oblige carriers to meet some of the costs. Finally, although carriers had to pay the full cost of running iPhone ads on TV, they were only allowed to use Apple’s own ads, and the only thing they were permitted to change was adding their own logo to the final frame.

Additional areas of concern range from Apple Pay to a 4K video codec alliance!

What could happen to Apple as a result?

Antitrust outcomes will usually happen on a country-by-country basis, though there are exceptions. In Europe, for example, it is likely that the European Union will act as a bloc, and that any legislation applying to Apple will apply across all 27 member countries.

The worst-case scenario for Apple is for the US government to call for the breakup of the company. For example, it might be ruled that Apple Inc cannot run an App Store while also selling the iPhones on which those apps run. This is not a likely outcome, however.

A more likely scenario is a series of smaller changes. For example, Apple might be required to appoint an independent oversight board to carry out app reviews, or that it must allow Spotify to offer in-app subscriptions without taking a cut.

How is Apple responding?

In public, Apple’s stance is an outraged one, arguing that it does not have a dominant position and is doing nothing wrong. Behind closed doors, the company is aware that it either has to change some of its practices, or be forced to do so by law.

For example, while publicly declaring that a 30% commission on apps was industry standard, Apple made a massive U-turn by introducing the Small Business Program, with a 15% commission instead. Although touted as applying to the smallest developers, it in fact applies to 98% of them. It would be more accurate to say that the App Store now has a standard commission rate of 15%, with a higher 30% rate applying only to a tiny minority of companies.

The company has also quietly made a number of other changes in direct response to antitrust concerns, for example, opening up the Find My app to third-party accessories, and allowing people to change their default email app and web browser.

However, Apple is still sticking its head in the sand and hoping the issue will go away – when it absolutely won’t.

Antitrust Stories December 1

It’s not just Elon Musk using Twitter to complain about Apple (even if Tim Cook is now his new bestie): Spotify CEO Daniel Ek has tweeted a lengthy thread about his views on the Cupertino company.

He claims that Apple doesn’t care about consumers, courts, or the law – only its own interests …

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Antitrust Stories November 22

Apple cloud gaming and mobile browser policies are again under investigation in the UK, following a public consultation on the topics.

The Competition and Markets Authority (CMA) had already investigated both issues, and found Apple and Google guilty of anticompetitive behavior, but says that the public wants a “fuller” investigation …

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Antitrust Stories November 16

Last year’s Epic Games versus Apple ruling left both sides unhappy with the result, each filing its own appeal. An appeals hearing took place on Monday, and the intention and effect of the Apple ecosystem – aka the “Apple walled garden” – was the core issue debated.

Apple made the case that the ecosystem is designed to keep iPhone users safe from malware and scams, while Epic argued that the iPhone maker is simply afraid of competition …

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Antitrust Stories November 1

After the EU passed the Digital Markets Act this past summer, the new legislation has officially gone into effect at the start of November. While we’ve previously heard of the potential consequences, an EU official has reiterated that we could see Apple forced to open up iPhone to third-party app stores and more.

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Antitrust Stories October 6

Apple appears to have secured a major discount on its 1.1 billion euro antitrust fine in France. The company has successfully had the fine reduced to 372 million euros by a French court, according to a new report.

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Antitrust Stories October 3

An Apple and Amazon antitrust investigation in Italy last year found both companies guilty of price-fixing, fining them $225M. Both companies appealed, and a court has now cancelled the fines.

The basis of the decision has not yet been announced, and Apple had not commented at the time of writing …

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Antitrust Stories September 30

The Korean antitrust authority has carried out a dawn raid on Apple offices in the city of Gangnam-gu. The raid was part of an investigation into claims that Apple effectively charges some developers even more than the 30% cut, which has itself come under fire.

The same issue also sees small developers subjected to an effective commission of 16.5%, instead of Apple’s claimed 15% small business rate …

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Antitrust Stories September 26

Security researchers discovered 85 apps engaged in ad fraud; ten are on the App Store, and the other 75 are on Google Play. Combined, people downloaded them over 13 million times. They’re part of a new ad fraud campaign named “Scylla.”

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Antitrust Stories September 19

Apple gets caught up in all kinds of controversy, from antitrust issues to advertising, but one of the stranger ones concerns the company’s involvement with The App Association.

A piece this morning claims that the company exerts significant influence over a body designed to represent developers, when their interests may be at odds with those of the App Store owner …

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DOJ antitrust lawyers have asked to make 10 minutes of oral argument during the upcoming Apple versus Epic Games appeal. The Department of Justice wants to follow up its previous written brief, which argues that the court erred in finding mostly in Apple’s favor.

Technically, the DOJ isn’t appearing for either side, but the argument it makes supports Epic’s contention that the App Store is in breach of antitrust laws …

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Antitrust Stories September 9

A DOJ antitrust action against Google could see Apple lose billions of dollars a year from its Services revenue. The Department of Justice (DOJ) is challenging the legality of Google paying the Cupertino company a huge sum to remain the default search engine on iPhones.

While Apple is under antitrust investigation on a number of different fronts, this particular case is targeting Google …

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Antitrust Stories September 6

European Union San Francisco office opened, after elected officials visited Apple

A new European Union San Francisco office has been opened, aiming to better liaise with US tech giants on new antitrust laws …

Antitrust Stories August 24

Datings apps plan to give no break for Apple, as Tinder owner Match Group filed an antitrust case against the Cupertino company, now in India. It accuses Apple of “monopolist conduct” by forcing developers to pay high commissions for in-app purchases.

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Antitrust Stories August 11

Last year’s Epic Games versus Apple ruling left neither side happy, with both the developer and iPhone maker filing appeals against the judgement. The appeal hearing has now been scheduled for October 21, and it looks set to be an uphill battle for Apple.

Apple and Epic will each get only 20 minutes to make oral arguments, but we may also be hearing from the antitrust division of the Department of Justice (DOJ), and potentially also an argument on behalf of 35 state attorneys general – each of which is effectively siding with Epic …

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Antitrust Stories August 3

AAPL investors need to see inside the company’s “$70 billion black box,” say analysts – a reference to Apple lumping together all its Services revenue into one figure, despite the fact that it effectively covers ten different businesses with the company.

The issue is vital to understanding the level of the threat posed to Apple by antitrust regulations in respect of the App Store, they say …

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Antitrust Stories August 2

A firm of lawyers that successfully negotiated two Apple antitrust settlements is once again taking on the Cupertino company.

Hagens Berman, which won a $560M e-book settlement, and more recently a $100M App Store one, is again targeting Apple’s 15% or 30% cut of iOS app sales …

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Antitrust Stories August 1

Apple Pay web support has been made available to third-party browsers in iOS 16 betas. The change has been confirmed to apply to Chrome, Edge, and Firefox.

Apple has likely made the quiet change in response to upcoming antitrust legislation that seeks to outlaw the practice of forcing browser developers to use WebKit

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Antitrust Stories July 27

We’re not seeing much progress with US antitrust legislation just at present, but if the two bills do make it through the Senate, that raises the prospect of Apple default apps being banned. Which is to say, Apple could not pre-install its own stock apps on iPhones, instead having to offer customers a choice of core apps.

Above is one illustration of how Apple might respond, offering a choice of key apps during initial iPhone setup, likely with its own apps top of the lists …

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Democrats last week urged Senate Majority Leader Chuck Schumer to schedule votes on two pieces of tech antitrust legislation, but he last night told donors that he won’t do it yet.

At the heart of the impasse is a disagreement about whether enough senators would vote in favor of the two bills – one of which would have a big impact on Apple …

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The announcement of an Apple buy now, pay later feature, Apple Pay Later, has drawn the attention of the US consumer finance regulator, the Consumer Financial Protection Bureau (CFPB).

CFPB director Rohit Chopra said that Apple Pay Later raised “a host of issues,” with antitrust concerns one of those …

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Antitrust Stories July 22

Chuck Schumer is the obstacle to US antitrust laws being put to the vote
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Two proposed US antitrust laws should be put to a vote sometime in the next few weeks, say Democratic members of Congress.

In a letter to Senate Majority Leader Chuck Schumer, they express concerns that time is running out to approve the laws before the end of the year …

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Antitrust Stories July 21

Early this morning, 9to5Mac reported that tech lobbying spending hit $35M this year as companies are fighting antitrust measures. Now, a story shows that Apple alone spent $4.6 million in the first half of 2021. Not only that, but Apple’s Tim Cook has become one of the country’s most politically active tech CEOs of the moment.

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The combined tech lobbying spend of Apple, Amazon, Meta, and Google has hit $35.3M so far this year. All four companies are trying to fight antitrust measures that would reduce their market dominance.

In the second quarter of the year, the tech giants and their trade groups outspent big pharma – though Apple’s lobbying spend has returned to its prerecord level.

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Antitrust Stories July 19

We noted earlier today that Apple will probably use security as a defence to an Apple Pay lawsuit, and we didn’t have long to wait. Three new Apple Pay videos have been posted to YouTube, each promoting the security of the service.

Each video is super-short. The longest is 15 seconds, while the other two are just six seconds each …

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