Antitrust Overview Updated April 23, 2021


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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.

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.

US antitrust hearing

The US antitrust hearing into big tech is underway. Ahead of the hearing, the launch of AirTag was described as ‘timely,’ while Tile likened the Find My network to a ‘hostage’ program.

Antitrust Stories Yesterday

Apple’s lobbying spend hit a new quarterly record high in the first quarter of this year, as the company continues its efforts to fight antitrust measures.

Apple is feeling particular pressure from bipartisan support for both the Open App Markets Act and the American Innovation and Choice Online Act …

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Antitrust Stories April 11

The Apple versus Spotify antitrust battle took a new turn today, with the European Union saying that the Cupertino company will now face an additional charge of anti-competitive behavior.

This indicates that investigators have found enough evidence to add to the expected antitrust charges relating to the way that Apple treats Spotify and other developers …

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Antitrust Stories April 5

While there’s a lot of controversy regarding the App Store (whether Apple should let users have the option to pay for apps off it), governments and third-party developers continue to raise questions regarding if the store is a monopoly or not, the company could soon face another controversy as it is piloting tests that allow developers to automatically charge users for subscription price increases.

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Antitrust Stories April 1

It’s been a while since a big company defended Apple’s App Store regarding the Epic antitrust case. Last year, Snap’s CEO said that he was happy to pay App Store taxes “in exchange for all of the amazing technology that they provide to us,” and now Roblox has stated that Apple’s App Store enhances “safety and security” to its users.

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Antitrust Stories March 30

Apple has already been fined $55M by Dutch antitrust regulators, but a new Dutch class action lawsuit is going after the Cupertino company for billions rather than millions.

The lawsuit alleges that the 15% or 30% commission Apple charges makes app prices higher than they should be, and that the total cost to consumers is almost €5B ($5.5B) …

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Antitrust Stories March 29

The US antitrust bill, the American Innovation and Choice Online Act, has been endorsed by the Department of Justice.

The bill was introduced after a report stating that a number of tech companies – including Apple – were guilty of engaging in “deeply disturbing” anticompetitive behavior

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Antitrust Stories March 28

For the tenth week, the Dutch watchdog has fined Apple over the lack of third-party payment options for dating apps subscriptions. This time, the Authority for Consumers and Markets could finally swipe right to Apple as it’s reached the $55 million penalties for ongoing non-compliance.

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Antitrust Stories March 22

The Coalition for App Fairness (CAF) – which is primarily a voice for Epic Games, Spotify, and Tinder parent company Match in their antitrust fight with Apple over App Store commissions – has lost a second key figure.

In December of last year, Spotify’s legal officer Horacio Gutierrez left the company to join Disney. Today we’re learning that CAF executive director Meghan DiMuzio is also moving on …

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This week has seen Apple fined for the ninth time as it again failed to satisfy the Dutch antitrust regulator ACM that it was complying with the law in respect of the App Store.

Fines now total €45M ($49.7M), and if a tenth one is issued, that will hit the legal cap of €50M ($55M) – but that won’t be the end of it …

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Antitrust Stories March 21

European sanctions against Apple and other tech giants need to be much more severe if companies are to take them seriously, argues the bloc’s competition watchdog.

European Commission competition head Margrethe Vestager points to Apple’s failure to properly comply with a Dutch App Store ruling, seemingly preferring instead to pay the weekly fine of €5M ($5.5M) …

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Antitrust Stories February 28

Apple has written a letter arguing that the change it has offered in the Dutch App Store complies with the law, despite that fact that the antitrust regulator has rejected the proposal as ‘not serious.’

The latest development follows the European Union suggesting that Apple was happy to pay fines rather than properly comply with antitrust rules …

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Antitrust Stories February 23

Apple doesn’t care about the fact that it is regularly being fined €5M ($5.7M) by Dutch antitrust regulators, and would rather pay the fines than comply with the law, it is claimed.

The accusation was leveled by the European Union’s competition regulator Margrethe Vestager, after Apple was fined for the fifth time …

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Antitrust Stories February 21

Apple has been fined for the fifth time over the App Store regulation controversy in the Netherlands. The country’s antitrust watchdog is charging the Cupertino company over $5.7 million again – for the fifth week in a row – over the lack of third-party payment options for dating apps subscriptions.

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Antitrust Stories February 18

A description of the Coinbase App Store policy makes very clear the disproportionate power Apple holds over the tech sector, argues a new piece today.

The company’s CEO says that whatever Apple wants, it gets – which doesn’t exactly help Apple’s antitrust argument that its App Store is simply one platform…

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Antitrust Stories February 16

One of the biggest antitrust issues facing Apple has been around its monopoly on the iOS app market. One proposed solution has been to allow competing app stores, while another has been for Apple to allow sideloading of iOS apps in exactly the same way it does on Macs.

Apple argues that sideloading would be dangerous, opening up the iPhone to malware and scam apps – but Jason Snell has put forward an interesting argument that it could make iOS apps better, rather than worse …

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The new head of the federal broadband administration has revealed that part of his role will extend to reviewing competitiveness in the mobile app ecosystem, adding yet another source of antitrust pressure to Apple’s App Store.

This reflects an executive order from President Biden stating that ‘it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly’…

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Antitrust Stories February 4

Developers reacted with astonishment and anger at Apple’s 27% commission policy as a minimal form of compliance with a new antitrust law regarding the App Store.

One leading developer described the move as ‘vile,’ while another said Apple is deliberately ensuring it would cost developers more to opt-out of Apple’s payment system than it would to remain within it …

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Apple’s latest response to antitrust regulation is to announce a 27 percent App Store commission instead of the standard 30 percent for apps that offer alternative payment systems.

Not worldwide, of course. Apple is still reacting on a country-by-country, regulation-by-regulation, lawsuit-by-lawsuit basis – so this specific policy relates only to dating apps, and only in the Netherlands

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Antitrust Stories February 3

South Korea has stated that it is still not satisfied with Apple’s App Store plans to comply with a new antitrust law requiring developers to be able to choose third-party payment platforms.

The regulator has also expressed concern at Google’s plans, which include just a 4% reduction in the company’s app store commission if a developer uses a different payment processor …

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Antitrust Stories February 2

Apple is once again fighting against bills that try to force the company to allow distribution of iOS apps outside the App Store. This time, the company urged US lawmakers to reject an antitrust bill in the US Senate that would allow users to install any apps on iPhone and iPad.

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Antitrust Stories February 1

Apple and other tech giants are using anti-China lobbying as part of their attempts to fend off US antitrust legislation, according to a new report today.

The lobbying is being done via US foreign policy think tanks …

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Antitrust Stories January 28

The White House and 35 US states have filed amicus briefs in support of the Epic Games antitrust appeal against Apple.

All are essentially arguing that the original judge made a legal error in deciding how a key antitrust law applies to the Cupertino company …

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Antitrust Stories January 27

Senator Amy Klobuchar, co-sponsor of two bipartisan antitrust bills, has dismissed Apple’s opposition to the proposed laws, after CEO Tim Cook personally lobbied against the bills.

The proposed laws are designed to prevent tech giants from abusing their dominant position to favor their own products over competing ones …

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Antitrust Stories January 19

After Arizona unsuccessfully tried to force Apple and Google to allow alternative payment methods in third-party apps distributed through the App Store and Google Play, Illinois is now following suit. Illinois senators have filed a bill to make both companies allow developers to use whatever payment methods they want.

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