Comparative Analysis Of Apple's Legal Challenges Across Jurisdictions

Apple Inc. (Apple) has become the subject of multiple antitrust investigations across various jurisdictions worldwide recently, regarding the allegations on abusing its dominant position by preventing third-party developers from competing in the market. Following a short review of past investigations, this article aims to explore and compare the latest investigations launched by the Turkish Competition Authority ("TCA"), the U.S. Department of Justice ("DoJ"), and the European Commission. Each investigation focuses on different aspects of Apple's mobile app business practices, examining potential violations of competition laws and regulatory frameworks specific to their respective jurisdictions and addresses allegations of abusive behaviors, shedding light on the global regulatory investigations facing the tech giant.

Background Information on the Investigations:

Allegations on Apple's behavior regarding third-party developers was a matter of controversy in earlier investigations. In fact, these allegations have been on the radar of many competition authorities in recent years and have been the subject of several investigations. For instance, in the previous investigation that The Authority for Consumers and Markets ("ACM") had initiated against Apple in 2021¹, ACM found that Apple's implementation on making App providers paying a fee each year for using App Store is not proportional and, furthermore, not necessary. In the end, ACM had considered the conditions to be unreasonable and in violation of competition rules and ruled Apple to modify these conditions.

Similarly, in 2021, Competition and Markets Authority ("CMA") launched an investigation under the Competition Act, concerning Apple's conduct in relation to the distribution of apps on iOS and iPadOS devices in the UK² in particular the terms and conditions governing app developers' access to Apple's App Store, which is still ongoing to this date.

In another case issued by German Competition Authority ("Bundeskartellamt") in 2021³, to examine Big Tech companies' practices, Apple's tracking rules for third-party apps was found in favor of Apple's own offerings and/or might impede other undertakings.

Finally, in a recent investigation launched by the European Commission ("the Commission") on March 2024⁴, regarding Big Tech companies including Amazon, Meta, Alphabet, Microsoft, ByteDance and Apple, the previously designated gatekeepers by the Commission in September 2023⁵, the Commission decided that the companies must fully comply with all obligations in the Digital Markets Act ("DMA"). Later, the Commission found that Apple's conduct does not meet the DMA's compliance standards, and that it has initiated a new non-compliance procedure against Apple, citing concerns that the new contractual requirements for third-party developers and app stores. This new procedure regarding Apple will be examined further below.

Recent Investigations Launched Against Apple:

Despite the varying specifics of the cases, the actions taken by the ACM, CMA, Bundeskartellamt, and the European Commission in recent years reflect a common concern. Notably, similar decisions have been echoed by the Turkish, U.S. and European watchdogs, underscoring a consistent regulatory perspective on Apple's business practices. These ongoing efforts highlight the sustained focus on ensuring fair competition and addressing Apple's restrictive policies affecting third-party developers.

TCA Investigation (Türkiye)⁶: TCA decided to initiate an investigation against Apple Inc. and Apple Teknoloji ve Satış Ltd. (together "Apple") to determine whether Apple have violated Article 6 of the Act No. 4054 by mandating its own payment system in the App Store and applying anti-steering provisions to mobile application developers.

TCA found that there was a suspicion that Apple imposed restrictions on payment systems to app developers in the App Store, within the scope of the "Mobile Ecosystems Market Inquiry" which is currently being conducted to examine structural and behavioral competition problems in the industry regarding mobile smart devices and software for these devices. Accordingly, TCA stated that Apple has;

Prevented consumers from accessing payment options other than Apple Pay by prohibiting app developers from informing users about payment channels outside the app and including links to those channels; and
Removed the freedom of choice of app developers and preventing other payment systems from entering the Apple ecosystem, by mandating Apple's own payment system, In-App Purchase (IAP), which generates 30% commission revenue from sales transactions.

Subsequently, it was examined whether the above conduct of Apple is anticompetitive. As a result of the examination and evaluations, the TCA has decided that an investigation should be opened against Apple.

DoJ Lawsuit (United States)⁷: The U.S. Department of Justice (DoJ), filed an antitrust lawsuit against Apple Inc. (Apple) for allegedly violating competition laws by attempting to monopolize smartphone markets and restricting access to hardware and software features of the iPhone.

The DoJ stated that Apple's actions have made it harder for consumers to switch smartphones by abusing its dominant position in the "smartphone" and "performance smartphones" markets, while also impeding product and service development, imposing high costs on developers, businesses, and consumers. The DoJ further claims that Apple's anti-competitive behaviors extend beyond smartphones to various other markets, including web browsers, video communication, news subscriptions, entertainment, automotive services, advertising, location services, and more. Specific behaviors identified and implemented by Apple, as determined by the DoJ, include:

Blocking Innovative Apps: Development of applications with broad functionality that would facilitate easier switching between competing smartphone platforms has been hindered.
Suppressing Mobile Cloud Streaming Services: Development of cloud streaming applications and services that would enable consumers to enjoy high-quality video games and other cloud-based applications without having to pay for expensive smartphone hardware has been stifled.
Excluding Cross-Platform Messaging Applications: The quality of cross-platform messaging has been degraded to encourage consumers to continue purchasing iPhones.
Diminishing the Functionality of Non-Apple Smartwatches: The functionality of third-party smartwatches has been restricted to ensure that consumers who purchase the Apple Watch face significant costs if they do not continue purchasing iPhones.
Limiting Third-Party Digital Wallets: Offering tap-to-pay functionality has been prevented for third-party applications, inhibiting the creation of cross-platform third-party digital wallets.

In conclusion, the DoJ has filed a lawsuit alleging that Apple has abused its dominant position in the market through various aforementioned practices.

Later, on the 11^th of July, 2024, four more states (Indiana, Massachusetts, Nevada and Washington state) also joined the antitrust lawsuit filed by DOJ and 15 states against Apple for violating Section 2 of the Sherman Act by creating a monopoly in the smartphone market.

European Commission Investigations (EU):

Investigation on App Store⁸: As mentioned before, the Commission has notified Apple of its preliminary opinion that the App Store rules violate the DMA by restricting app developers from guiding consumers to alternative channels for offers and content. Additionally, the Commission initiated a new non-compliance procedure against Apple, citing concerns that the new contractual requirements for third-party developers and app stores, including the "Core Technology Fee," do not meet the DMA's compliance standards.

According to the DMA, developers using Apple's App Store should be allowed, at no cost, to inform customers about cheaper purchasing options, guide them to these offers, and facilitate purchases. In the Commission's preliminary view, the Commission found that Apple currently has three sets of business terms governing its relationship with app developers, including the App Store's steering rules. In addition, the Commission preliminarily finds that;

None of these business terms allow developers to freely steer their customers, and developers cannot provide pricing information within the app or communicate in any other way with their customers to promote offers available on alternative distribution channels,
Under most of the business terms available to app developers, Apple allows steering only through "link-out" and this is subject to several restrictions imposed by Apple that prevent app developers from communicating, promoting offers and concluding contracts through the distribution channel of their choice.
Although Apple can receive a fee for facilitating via the AppStore the initial acquisition of a new customer by developers, the fees charged by Apple go beyond what is strictly necessary for such remuneration,
Developers should be able to inform customers of alternative, cheaper purchasing options and allow them to make purchases outside the App Store.

The Commission's preliminary findings suggest Apple's terms do not comply with Article 5(4) of the DMA. If confirmed, the Commission will adopt a non-compliance decision within 12 months from March 25, 2024.

As to the "New Non-Compliance Investigation" launched by Commission, on the other hand, to investigate Apple's new contractual requirements for third-party developers and app stores, the Commission's key concerns include;

The "Core Technology Fee" which developers of third-party app stores and third-party apps must pay a €0.50 fee per installed app,
The multi-step user process for downloading and installing alternative app stores or apps on iPhones, and
Eligibility requirements for developers to offer alternative app stores or directly distribute apps.

The Commission will investigate these structures imposed, and whether those effectively comply with the DMA. The investigation will determine if these new requirements meet the necessity and proportionality standards of Article 6(4) of the DMA.

Investigation on iTunes⁹: The Commission fined Apple approximately €1.8 billion for abusing its dominant position in the market for the distribution of music streaming applications to iPhone and iPad users ("iOS users") through the App Store. In particular, the Commission found that Apple's "anti-steering provisions" preventing app developers from informing iOS users about music subscription services outside the Apple ecosystem, restricted iOS users' access to alternative and more affordable subscription services. According to the Commission's assessment, Apple is prohibiting;

In-app notifications about the prices of out-of-app subscription offers available on the internet and about price differences between in-app subscriptions sold through Apple's in-app purchase mechanism and out-of-app subscriptions, and
The inclusion of in-app links directing iOS users to the app developer's website where alternative subscriptions can be purchased, and prohibiting emails to new subscribers about alternative pricing options.

These restrictive provisions were considered not to be essential and proportionate to the protection of Apple's commercial interests in relation to the App Store, and to adversely affect the ability of iOS users of streaming music subscription services to make informed and effective decisions regarding their subscription process. Indeed, Apple's nearly decade-long practice of charging high commission fees to developers has resulted in consumers paying higher prices for music streaming subscriptions. Moreover, these provisions resulted in other non-monetary negative user experiences for some users, such as the burden of searching for alternative out-of-app offers or the inability to obtain any subscription service for users who did not make such searches.

In assessing the administrative fine against Apple, the Commission took into account that Apple had provided misleading information, as well as the fact that the infringing conduct caused non-monetary harm and imposed a lump sum fine in addition to the basic fine for deterrence purposes. Finally, in addition to the administrative fine, Apple was obliged to remove the anti-steering provisions imposed on developers.

Comparison and Similarities Across Investigations:

As can be seen, the investigations conducted against Apple by the TCA, DoJ, and the Commission reveal significant similarities in their allegations of anti-competitive behavior. Each case focuses on Apple's dominant position in various markets—mobile ecosystems, smartphones, and digital platforms—and accuses the undertaking of restricting competition by imposing limitations on alternative payment systems and steering practices. The TCA criticizes Apple for hindering app developers from using external payment options, while the DoJ contends that Apple's restrictions on innovative apps and services reduce consumer choice and innovation in cloud streaming and messaging platforms. Similarly, the European Commission challenges Apple's music streaming app iTunes's anti-steering provisions and App Store rules in general for potentially violating competition rules. These investigations collectively underscore a global regulatory trend aimed at scrutinizing Big Tech's market conduct and ensuring a competitive digital marketplace. In order to summarize, there are four different categories of the comparison on the investigations conducted by the aforementioned authorities;

Focus on Market Dominance: All investigations scrutinize Apple's dominant position in their respective markets (mobile ecosystems, smartphones, and digital platforms).
Restrictions on Competition: Each authority alleges that Apple's practices stifle competition by limiting consumer choice and hindering innovation.
Anti-Competitive Practices: Commonly identified practices include imposing restrictions on alternative payment systems, mandating exclusive use of Apple's services, and limiting functionalities of competing products.

International Scope: Despite jurisdictional differences, all investigations reflect global concerns over Apple's market conduct and its implications for competition and consumer welfare.

In conclusion, while each investigation approaches Apple's practices from distinct regulatory frameworks and legal standards, they collectively highlight ongoing global scrutiny of Big Tech firms and the evolving landscape of digital market regulation.

Footnotes

1. ACM, ACM obliges Apple to adjust unreasonable conditions for its App Store, 24.12.2021 last accessed on: 26.06.2024, https://www.acm.nl/en/publications/acm-obliges-apple-adjust-unreasonable-conditions-its-app-store

2. CMA, Investigation into Apple AppStore, 04.03.2021 last accessed on: 26.06.2024, https://www.gov.uk/cma-cases/investigation-into-apple-appstore

3. Bundeskartellamt, Proceedings against large digital companies, 2021, last accessed on: 26.04.2024 https://www.bundeskartellamt.de/EN/Digital_economy/proceedings_against_large_digital_companies/proceedings_against_large_digital_companies_node.html

4. European Commission, Designated gatekeepers must now comply with all obligations under the Digital Markets Act, 07.03.2024, last accessed on: 26.06.2024, https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1342

5. European Commission, Digital Markets Act: Commission designates six gatekeepers, 06.09.2023, last accessed on: 26.06.2024, https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4328

6. Turkish Competition Authority, Investigation Against Apple Inc. and Apple Teknoloji ve Satış Limited, 06.06.2024, last accessed on: 25.06.2024, https://www.rekabet.gov.tr/tr/Guncel/apple-inc-ve-apple-teknoloji-ve-satis-li-013f35240324ef1193cb0050568585c9

7. United States Department of Justice, Justice Department Sues Apple for Monopolizing Smartphone Markets , 21.03.2024, last accessed on: 25.06.2024, https://www.justice.gov/opa/pr/justice-department-sues-apple-monopolizing-smartphone-markets

8. European Commission, Commission opens non-compliance investigations against Alphabet, Apple and Meta under the Digital Markets Act, 25.03.2024, last accessed on: 25.06.2024, https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1689

9. European Commission, Commission fines Apple over €1.8 billion over abusive App store rules for music streaming providers, 04.03.2024, last accessed on: 26.06.2024, https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1161

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Antitrust/Competition Law

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Turkey