What the German antitrust watchdog said about Apple

“A main focus of the investigations will be on the operation of the App Store.” — Andreas Mundt, President of the Bundeskartellamt

President Mundt’s remarks, from the Bundeskartellamt’s press release:

We will now examine whether with its proprietary operating system iOS, Apple has created a digital ecosystem around its iPhone that extends across several markets. Apple produces tablets, computers and wearables and provides a host of device-related services. In addition to manufacturing various hardware products, the tech company also offers the App Store, iCloud, AppleCare, Apple Music, Apple Arcade, Apple TV+ as well as other services as part of its services business. Besides assessing the company’s position in these areas, we will, among other aspects, examine its extensive integration across several market levels, the magnitude of its technological and financial resources and its access to data. A main focus of the investigations will be on the operation of the App Store as it enables Apple in many ways to influence the business activities of third parties.

My take: I think we all know what he’s going to find. Note that Apple is the fourth U.S.-based tech megacap to come under the scrutiny of the Bundeskartellamt, following Facebook (28 January 2021), Amazon (18 May 2021) and Google (25 May 2021). I wonder if the others looked like lower hanging fruit.

13 Comments

  1. They’re just piling on! The onslaught reminds me of rugby or other professional sports when the benches empty. If Apple were a ship these would be rough seas indeed. All these efforts will need to survive court challenges probably to the highest courts in each land. In the meantime the ecosystems & platforms will evolve to a point where the intended regulations, laws or decrees make little sense. Government mules are no match for the Enterprise.
    Note: No hit to Warren Hayne’s musical efforts intended.

    3
    June 21, 2021
  2. Michael Goldfeder said:
    While the customers enjoy and appreciate the privacy and security of the Apple seamless ecosystem, it’s interesting that these purported “antitrust” actions all copiously ignore a billion satisfied users.

    6
    June 21, 2021
  3. Gary Gouriluk said:
    Time to begin selling a special “locked down” iPhone model (or perhaps a locked down version of IOS) with only Apple apps and specially licensed and (well compensated) pre-paid and pre-vetted versions of essential apps. Then Apple fans have the option of the government regulated iPhone or an Apple regulated iPhone?

    7
    June 21, 2021
    • David Emery said:
      This is, of course, the model that companies use for either company-provided devices or in many cases for personal devices used for company business.

      As always, much will depend on how each government/court system defines “the market.” (I wonder, by the way, what the rules are for 3rd party software updates on German-made automobiles…)

      3
      June 21, 2021
    • Fred Stein said:
      I like the way you put it, Gary.

      I’d love to ask any of the government folks how they would regulate iPhone Apps if their government made it and distributed it. (Government do build and manage assets like bridges, airports, etc.) Worth noting, before 9/11, governments did not see the inherent risk of the laissez faire approach to people boarding airplanes.

      1
      June 21, 2021
      • Gregg Thurman said:
        Worth noting, before 9/11, governments did not see the inherent risk of the laissez faire approach to people boarding airplanes.

        Even after 40 years of hijackings and passenger killings.

        And we’re not even addressing government response to a pandemic.

        Yeah, that’s what I want: government control over the App Store I use for my iPhone.

        2
        June 21, 2021
  4. Lalit Jagtap said:
    Finally govt. entities are investing efforts to understand the “real forces of digital economy”. I think Mr Cook and his team, is ready to educate lawmakers. The Apple has laid foundation for multi-platform devices to help humanity. Hope the govt. entitles and journalists, understand that we need “controlled pipes on internet with the secured devices” in digitally connected world. I think this is similar to passport, visas and air travel rules, and carefully designed, manufactured planes we have all taken for granted. Does our lawmakers will force Boing or Airbus or Airplane Engine makers to open up their whole echo systems?

    3
    June 21, 2021
    • Gregg Thurman said:
      Excellent points Lalit. Safety trumps anti-trust

      1
      June 21, 2021
  5. Gregg Thurman said:
    Introducing MacOS was not an anti-trust violation.
    Introducing iOS was not an anti-trust violation.
    Introducing iPadOS was not an anti-trust violation.
    Introducing WatchOS was not an anti-trust violation.

    Introducing interoperability between these platforms is not an anti-trust violation.

    Introducing the iTunes Music Store was not an anti-trust violation.
    Introducing the App Store was not an anti-trust violation. The App Store created a curated market, providing products that actually worked, safety from bad actors and digital privacy that did not previously exist, such that buyers flocked to it, seeking those very attributes that are not available on competing platforms.

    The rules pertaining to placing products on these two stores were pre-announced and very public.

    Apple’s pricing is not predatory, undercutting the competition. To the contrary the competition adopted the App Store pricing model after the fact.

    Apple does not possess market share dominance in any of the markets it competes in, ergo, no anti-trust violation.

    AndroidOS is installed on more mobile devices than is Apple’s mobile OS. Android products dominate mobile market share with well over 60% share. Android products sell for less than Apple products by a significant margin.

    App Store rules were not considered anti-trust violations when announced, and did not become targets for trust busters (read: politicians) until 10 years later when a very tiny portion of users began clamoring for user repairability, and third party developers demanded lower Store fees.

    Someone please explain to me how a business model, that the buying public clearly wants, is now considered anti-competition.

    Seems to me the competition is hurting (if, in fact, they are) due to the business model decisions made about 11 years ago.

    How is that Apple’s fault, and more importantly why is it necessary to force Apple to adopt the business models of those failing competitors? How does the user benefit from these forced rule changes? They don’t.

    These forced changes affirm government power to regulate, and by extension tax, without regard to the public good.

    7
    June 21, 2021
    • Fred Stein said:
      Great points, Gregg.

      I’d love to ask (again) those who see Apple as anticompetitive, “Why do developers prosper more on Apple’s walled gardens than on the Android open approach?”

      1
      June 21, 2021
  6. Daniel Epstein said:
    I guess Apple not making commodity equipment and software is a problem for regulators. It boggles their minds. The fact it is very profitable and popular makes it a target. Still anyone can buy a competing product or group of products. Apple makes almost nothing that is completely unique. They just try and make it work easily and together with other common products they sell. And continue to improve that experience over time. Makes you wonder why so few companies try it the way Apple does. No one would care if regulators went after a company which wasn’t successful. Trying to figure out how the digital marketplace is different from the physical market place is a problem so some confusion is understandable. Trying to avoid A Brave New World mentality might be harder than we think.

    2
    June 21, 2021
  7. Steven Philips said:
    Lalit said “I think Mr. Cook and his team are ready to educate lawmakers.”
    I say – People with agendas don’t want to be – and can’t be – “educated”. And just about every congressperson has an agenda. And it’s NOT “making things work.”

    2
    June 21, 2021

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