On Monday, of its preliminary view that the company’s app store rules breach the Digital Markets Act (DMA),which came into force in March.
Should that finding be upheld in a final ruling due by late March next year,Apple could be fined up to 10 per cent of its global revenues. Last year,those were $US383 billion ($576 billion) so the fine could be more than $US38 billion ($57.1 billion).
Apple’s Fifth Avenue store in New York. Given the strict laws governing tech in Europe,it may not be the company’s home market that will shape its future.AP
The commission said its preliminary view was that Apple’s app store rules breached the DMA because its business terms prevented app developers from steering consumers to alternate ways to pay or access content outside the Apple ecosystem.
Apple,of course,said it was confident its rules complied with the new law and estimated that more than 99 per cent of developers would pay the same or less in fees to Apple under the new business terms it created to comply with the Act.
The tech giant has generally defended itself against accusations of anticompetitive conduct by saying that the rules governing the highly integrated Apple ecosystem or,as it is often described,its “walled garden,” are designed to protect users’ security and privacy.
Apple has proved to be something of a target for Europe’s competition regulators. In March,using pre-existing competition laws, for allegedly throttling competition from music streaming services that compete with Apple Music. It has appealed against that decision.
The European Commission also announced on Monday that it was launching a new,separate investigation into Apple’s “core technology fee” – 50 euro cents for every download of the developers’ apps once they have been downloaded more than a million times within a year. Developers have labelled the fee a new and anticompetitive tax.
But Apple isn’t the only big US tech company in the European Commission’s sights.
Google’s parent,Alphabet,and Facebook’s parent,Meta Platforms,are also being investigated by the commission over potential breaches of the DMA,while Meta,TikTok and X have been targeted for investigation over potential breaches of the DMA’s sister legislation,the Digital Services Act (DSA),which regulates content.
It’s the European Union,rather than Big Tech’s home jurisdiction and home market,that will shape the big technology companies’ futures.
The companies are also appealing the fees the commission has imposed on platforms for the cost of enforcing the DSA.
Until the European Union enacted the DMA and DSA,most of the major global jurisdictions were – and most still are – reliant on antitrust competition laws never designed to deal with the novel competition and data privacy issues generated by the big technology platforms.
In the US,for instance,the Justice Department,the District of Columbia and 16 states,or attempting to monopolise,the smartphone market via its contractual restrictions on developers.
The suit alleges that Apple uses its monopoly power to extract more money from consumers,developers,content creators,artists,publishers and small businesses,among others.
Apple’s App Store has been described as a “walled garden”.AP
It could take years for that action to be finalised,one way or another. The European laws are designed to get relatively speedy outcomes from legislation as they’re developed quite specifically for the particular issues raised by the platforms,unlike general antitrust laws.
It is not just competition laws where the US and Europe have chosen different paths.
Earlier this year, setting standards for security and privacy protections for the deployment of artificial intelligence,which broadly reflected voluntary commitments made by the major AI developers.
The order requires companies to share safety test results with the government,develop tools for ensuring their systems are safe and secure and deliver standards for detecting AI-generated content and authenticating official content.
The US Congress hasn’t passed any bills regulating AI,but the European Parliament enacted legislation in March establishing by far the most comprehensive regulation of AI of any major Western economy.
The new laws,among other things,prohibit AI applications considered to have unacceptable risk levels,social scoring systems,or AI screening of employees and potential employees. Copyright laws must be respected,and there are transparency and disclosure rules,cybersecurity protections and rigorous testing requirements.
Again,these are purpose-designed laws that deal with developments that previous legislators would never have envisaged. Existing laws elsewhere don’t adequately respond to the novel challenges and significant risks that wide-scale deployment of AI presents.
Apple has already decided to withhold the new AI features in the smartphones it sells this year because of concerns about the DMA and AI laws. Meta has also postponed the launch of its AI offer in Europe because of the impact of the European data protection provisions on its ability to train its large language models.
Tech giant Apple has been accused by the US government of illegally maintaining a monopoly over the phone market.
Because it is the first and,so far,the only major jurisdiction (other than China) to develop laws targeting big tech platforms,Europe is effectively setting a global standard.
Companies can’t access the potential 450 million European customers unless they comply with the laws or are prepared to face quite draconian financial penalties.
Apple’s potential $US38 billion-plus fine,if it were found to have breached the DMA,would be doubled in case of a further breach. Under the DSA,companies can be fined up to 6 per cent of their global turnover.
Given that Europe is too big a market to be ignored and that there are complexities and costs in developing products purely for that market,the European laws set the standard for regulating the six companies that the EC has identified as the “gatekeepers” of the platform economy:Alphabet,Amazon,Apple,ByteDance (TikTok),Meta and Microsoft – the world’s most powerful and valuable technology companies and all of them,except for ByteDance,US companies.
It’s improbable that the US Congress,regardless of who is in the White House,would pass competition,content and AI-specific laws as prescriptive as those now in force in Europe,which means it’s the European Union rather than Big Tech’s home jurisdiction and home market,that will shape the big technology companies’ futures.
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