Apple has the resources to defend itself against ever more antitrust investigations around the globe, but at some point it's simply going to run out of management bandwidth and, even prior to that, of political capital. Apple is increasingly seen as an unrepentant and reckless violator of competition laws. Apple's arguments boil down to a mix of pretexts and hypocrisy. But for the time being that's still a profitable game for Apple to play, as justice delayed is justice denied. While Apple continues to harm wide swaths of the digital economy through non-creative destruction, policy makers and regulators are usually too slow and timid to effectively combat Apple's abusive practices.
But if there are enough initiatives in different jurisdictions targeting different aspects of Apple's abuse of its market power, we will see significant improvements, though nothing would be even remotely as impactful as a successful appeal by Epic Games leading to a single-brand market definition. The United States Court of Appeals for the Ninth Circuit has granted Apple an extension until July 15 for its final brief, which in formal terms is only supposed to reinforce Apple's appeal of Epic's consolation prize from the district court (an injunction under California Unfair Competition Law) but which Apple will try to use in order to make some final points even on the more important issues in the case.
There are two reasons for which Epic lost (apart from the aforementioned consolation prize) in the district court: the state of affairs of U.S. antitrust law after an extended period during which the courts--mostly conservative judges--essentially gutted the Sherman Act (though the tide has turned and even conservatives have enough of certain Big Tech companies' behavior), and the misconceptions that resulted in incorrect findings and holdings by the Epic v. Apple judge (a Democrat; it's not just a matter of opinion or preference but simply a demonstrable fact that she got the law, the economics, and the technology wrong).
Meanwhile, there are interesting developments in two jurisdictions that face far lower hurdles than U.S. antitrust plaintiffs as they seek to restore competition. Toward the end of a recent post I already mentioned the UK Competition & Markets Authority's market investigation concerning mobile browsers and cloud gaming (the combination is key). From what I heard, Geradin Partners--an antitrust boutique that started in Brussels but has recently expanded to London, where it brought in two former CMA directors--has advised and continues to represent a number of clients with respect to CMA complaints over Apple's conduct.
I'll talk about that market investigation some more on another occasion. For now, it's important to bear in mind that a market investigation gives the CMA fundamentally more wiggle room than a unilateral-conduct investigation. Simply put, the CMA doesn't have to establish wrongdoing. It can simply take action to fix a market failure.
Another jurisdiction that I've repeatedly said Apple's rivals should have prioritized even earlier is Germany. The German legislature amended the country's competition law (GWB, Act Against Restraints of Competition) with special rules addressing gatekeepers (Section 19a) entering into force at the beginning of last year. The Bundeskartellamt (Federal Cartel Office) strives to apply those rules, which clearly enhance its ability to address anticompetitive conduct by gatekeepers like Apple, prudently and judiciously. But now the Section 19a hammer may finally be coming down on Apple with full force as the FCO announced a review of "Apple's tracking rules for third-party apps."
I found out on LinkedIn that Hausfeld Germany is advising many complaints. They're really doing tremendous work against Big Tech. I don't think any other German law firm is even half as relevant at this stage when it comes to antitrust complaints over Apple and Google. Some great firms couldn't do it as they count Apple among their clients, but that serves to explain Hausfeld's amazing track record only in part.
Apple's app tracking rules are simply a money and power grab, and the BKartA (FCO) has it all figured out--and is now looking into the matter from the angle of self-preferencing, as Apple applies different rules to its own apps:
Apple going full Russel Conjugation here
— tobi lutke (@tobi) June 3, 2022
I personalize, you track across apps, they invade your privacy. https://t.co/w55sVWEb2q
The problems were foreseeable. Already last year, organizations advised by Geradin Partners complained to French competition authority Autorité de la concurrence (Adlc) about it, and sought interim measures (like a preliminary injunction, but by a regulator as opposed to a court). At the time, the Adlc wasn't able to take such action against Apple, and from what I heard, the problem was primarily that the French government's privacy watchdogs sided with Apple. In my opinion, privacy activists and watchdogs all too often become useful idiots for Apple's purposes. The lukewarm reception Tim Cook got at a recent meeting of privacy activists suggests that this is increasingly understood, with more and more people refusing to be fooled into thinking that Apple is truly their ally. Apple is just about Apple.
This leads to the second unique aspect of the German FCO investigation (the first one was the gatekeeper statute): that country is known for a very strong data privacy movement.
When the French Adlc declined to order interim measures against Apple, it was too early to demonstrate Apple's self-preferencing. That's not an issue now, and the German FCO has raised the issue. We may see some really interesting Franco-German dynamics in this context.
Dutch case isn't done and over yet
I continue to believe that the Dutch Autoriteit Consument & Markt (ACM; Authority for Consumers & Markets) was wrong to predict benefits to consumers and developers from changes Apple made to its rules--only with respect to the use of dating apps by customers based in the Netherlands--in response to an ACM decision. Consumer benefits are the first and foremost objective for competition watchdogs to pursue. That's why credibility is key, and for the reasons I explained in the post I just linked to, nothing is going to improve at this stage as a result of the action the ACM has taken as a result of a Match Group (Tinder) complaint.
However, the good news--and depending on how it goes, potentially even excellent news--is that there's more to the ACM's original decision than meets the eye. This is another example of how antitrust enforcement differs from country to country. The legal framework in the Netherlands is such that the target of an ACM decision can block the agency not only from enforcing but additionally from publishing parts of a ruling until a final court ruling on the respondent's appeal. The complainant(s) may know what's in the ruling, but wouldn't be allowed to talk about it. Politico Pro has now revealed that the presently unenforceable and sealed part of the ACM order relates to the commission Apple imposes on developers--aka as "the app tax":
The Dutch regulator is weighing a new order on the second part of the investigation, pending a ruling expected “in the second part of the year,” Snoep said. The other part of the probe targets Apple’s 30 percent fee for app developers, said two people familiar. (2/2)
— Simon Van Dorpe (@simonvandorpe) June 14, 2022
The present set of rules for dating apps in the Dutch market won't have pro-competitive benefits because Apple still imposes the same monopoly tax--it charges the same amount as its regular commission, minus 3%, a differential that is actually less than developers will often pay third-party payment processors, at least when the amount of a given payment is small (due to minimum transaction fees). If Apple not only had to allow third-party payment systems but was also barred from taxing the app economy (on Twitter, Elon Musk has more than once called it a tax on the Internet), meaning that it would at most be able to collect a fair royalty for its related intellectual property (which shouldn't be a higher percentage of revenues than whats Apple pays to owners of cellular standard-essential patents), consumers would indeed benefit.
Both the Dutch ACM and Apple are trying to win all the way. It could be that when all is said and done (i.e., all appeals have been exhausted, and this case could easily reach the European Court of Justice), Apple will be allowed to undo its rule change for Dutch dating apps--but it could also be that the full ACM decision will be released and enforced. In the latter scenario, the next step would then be to apply it to all apps, and for other jurisdictions to follow suit, including the Netherlands' neighbor to the East, Germany. The FCO is well aware of the Dutch dating app case, and in all likelihood will sooner or later take action as well.
Share with other professionals via LinkedIn:
