Apple: Cartel Office initiates proceedings – economy

The Federal Cartel Office will not give up in the fight against the market power of the large digital companies. On Monday, the competition authority announced that it would now also initiate proceedings against the American iPhone company Apple. The cartel office wants to investigate whether Apple has a “cross-market significance” which could then endanger competition. Such a fundamental check has been possible since the 10th amendment to the Act against Restraints of Competition (GWB Digitization Act). This came into force in January. Apple is currently the most valuable company in the world.

The Cartel Office is now bringing proceedings against all four of the large digital corporations from the USA. In addition to Apple, these are Google, Facebook and Amazon. In all cases there is a suspicion that competition in the respective markets is impaired by a dominant position. The Federal Cartel Office has gained power through the amendment to the GWB and can, in a two-stage process, examine companies that are of paramount importance for competition across the market and then prohibit practices that endanger competition. In some cases, for example at Amazon, something like this has already happened. The EU competition authority is also taking action against the so-called Gafa groups (Google, Apple, Facebook, Amazon).

“We will now examine whether Apple has built a digital ecosystem around the iPhone with the proprietary iOS operating system across several markets,” says Andreas Mundt, President of the Federal Cartel Office. Apparently there are some arguments for it. The problem from the authority’s point of view: Apple manufactures mobile phones, tablets and computers and at the same time sells a range of device-related services, such as the app store, iCloud, Apple Music and Apple TV. “In addition to the Group’s position in these areas, we will also deal with extensive integration across several market levels, the company’s technological and financial resources and its access to data,” said Mundt. One focus of the investigation will be on the operation of the app store. This enables Apple to influence the business activities of third parties.

In return, Apple refers to its importance for Germany

Apple announced that it would discuss with the Federal Cartel Office and “conduct an open dialogue about all concerns”. The app store is “a safe and trustworthy place” for customers, with a level of data protection that customers expect. In addition, the Americans refer to their importance in Germany. “Apple is proud to be an engine for innovation and jobs,” said the press release. The iOS app economy alone supports more than 250,000 workplaces in Germany. One billion euros will also be invested in the European Center for Chip Design in Munich. However, none of this has anything to do with the antitrust proceedings.

The cartel office made it clear that there could be further proceedings against Apple. There are already several complaints against potentially anti-competitive practices by Apple. These included, among other things, an association complaint from the advertising and media industry, which is directed against Apple’s tracking restriction of users in connection with the introduction of the new iOS 14.5 operating system. The complaint was filed at the end of April. With the new operating system, users must expressly agree that they may be assigned an individual advertising identification number. If they do not do this, they can no longer be tracked. Many media companies fear for their advertising business and see themselves disadvantaged by Apple.

Open detailed view

In addition, there is a complaint against the exclusive pre-installation of the company’s own applications on Apple devices, which could represent a so-called self-preference, which may be prohibited under competition law, according to the authority. Third-party providers would have very difficult access to Apple users. In addition, according to the Cartel Office, app developers have criticized the compulsion to use Apple’s own system for in-app purchases and the associated commission level of 15 to 30 percent. The EU Commission is also already bringing proceedings against Apple. This involves a possible restriction of the music streaming service Spotify and a corresponding preference for its own offer, i.e. Apple Music. The Bonn authority may want to get in touch with the European Commission and other competition authorities.

The Cartel Office had set up a “keynote address for the digital economy” a long time ago and is scrutinizing possible restrictions on competition in the digital sector, but the procedures are often lengthy and complicated. After several years of litigation, the authority won against the hotel booking platform Booking in court, so the so-called best price clause is prohibited. Booking can no longer force hoteliers to offer the best prices on the platform. The Bonn authority is currently conducting three proceedings against Amazon, three against Google and two against Facebook.

In the USA, too, the discussion about the market power of the Gafa corporations is getting louder. Most recently, US President Joe Biden selected Lina Khan as the new chairman of the US competition and consumer protection agency FTC, who is considered a critic of the large technology corporations.