The Competition and Markets Authority 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 in which developers can distribute third-party apps on Apple’s iPhones and iPads, and the only way for Apple customers to gain access to them.
The CMA’s investigation has been prompted by the CMA’s 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. This approval depends 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, which ultimately has the consequence that users have less choice or paying higher prices for apps and add-ons.
The CMA emphasises that this is only the beginning of the investigation and no decision has yet been made on whether Apple is breaking the law.
The 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 UK government in December 2020 on the shape of a new pro-competition regulatory regime for digital markets.
The European Commission currently has four open antitrust investigations into Apple, which were launched before the end of the Brexit transition period. These include three open investigations into Apple’s App Store. The CMA says that it will continue to coordinate closely with the Commission.
