The CMA has launched an investigation into Apple
following complaints that its terms and conditions for app
developers are unfair and anti-competitive.
In addition to designing, manufacturing and marketing electronic
devices such as smartphones and tablets, Apple also operates the
App Store. This is the only way for developers to distribute
third-party apps on Apple’s iPhones and iPads, and the only way
for Apple customers to access them.
The probe has been prompted by the Competition and Markets
Authority’s (CMA) own work in the digital sector, as well as
several developers reporting that Apple’s terms and conditions
are unfair and could break competition law.
All apps available through the App Store have to be approved by
Apple, with this approval hinging on developers agreeing to
certain terms. The complaints from developers focus on the terms
that mean they can only distribute their apps to iPhones and
iPads via the App Store. These complaints also highlight that
certain developers who offer ‘in-app’ features, add-ons or
upgrades are required to use Apple’s payment system, rather than
an alternative system. Apple charges a commission of up to 30% to
developers on the value of these transactions or any time a
consumer buys their app.
The CMA’s investigation will consider whether Apple has a
dominant position in connection with the distribution of apps on
Apple devices in the UK – and, if so, whether Apple imposes
unfair or anti-competitive terms on developers using the App
Store, ultimately resulting in users having less choice or paying
higher prices for apps and add-ons.
This is only the beginning of the investigation and no decision
has yet been made on whether Apple is breaking the law.
Andrea Coscelli, Chief Executive of the CMA said:
Millions of us use apps every day to check the weather, play a
game or order a takeaway. So, complaints that Apple is using
its market position to set terms which are unfair or may
restrict competition and choice – potentially causing customers
to lose out when buying and using apps – warrant careful
scrutiny.
Our ongoing examination into digital markets has already
uncovered some worrying trends. We know that businesses, as
well as consumers, may suffer real harm if anti-competitive
practices by big tech go unchecked. That’s why we’re pressing
on with setting up the new Digital Markets Unit and launching
new investigations wherever we have grounds to do so.
Today’s announcement follows the CMA’s July 2020 report on its
market study into online platforms and digital advertising, and
the CMA’s advice to the
Government in December 2020 on the shape of a new
pro-competition regulatory regime for digital markets. As the CMA
works with the Government on these proposals – which will
complement its current enforcement powers – the CMA will continue
to use its existing powers to their fullest extent in order to
protect competition in these areas.
The European Commission (EC) currently has four open antitrust
probes into Apple, which were launched prior to the end of the
UK’s Transition Period. These include three open investigations
into Apple’s App Store. The CMA continues to coordinate closely
with the EC, as well as other agencies, to tackle these global
concerns.
More information can be found on the Investigation into Apple
App Store casepage.
Notes to editor
-
The competition legislation relevant to the CMA’s
investigation is the Competition Act 1998. The Chapter II
prohibition in the Competition Act 1998 prohibits any conduct
on the part of one or more undertakings which amounts to the
abuse of a dominant position in a market, and which may
affect trade within the United Kingdom.
-
The CMA may launch an investigation under the Competition Act
1998 if it has reasonable grounds to believe that there has
been an infringement of competition law.
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‘Apple’ refers to the corporate group in its entirety,
including Apple (UK) Limited, Apple Europe Limited and Apple
Inc (US parent company).
