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May 27, 2024

Apple CEO Tim Cook Meets with EU Antitrust Chief Amid App Store Dispute

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Jan 16, 2024

Apple CEO Tim Cook met with European Union antitrust chief Margrethe Vestager this week to discuss ongoing disputes related to the App Store and impending new regulations under the Digital Markets Act. Their discussion comes as the EU pushes major tech companies for more fair competition and consumer choice.

Lead Up To The Meeting

The meeting follows over a year of back-and-forth between Apple and EU regulators over issues with Apple’s control of app distribution on iOS devices. At stake are billions of dollars in App Store commissions and fees, as well as the openness and security of the iOS platform.

In 2021, the EU began formal antitrust investigations into Apple’s App Store rules and payments policies, generally focusing on two areas:

  • Apple’s requirement that app developers use its in-app payment system for subscriptions and other purchases
  • Alleged anti-competitive behavior in how Apple manages its App Store, especially in limiting rival apps that compete with its own services

The EU’s view is that Apple’s policies are unfair and limit consumer choice. Apple has disputed this, saying its App Store has been an “economic miracle” and provides customers security, privacy, and reliability that is unmatched.

Last year, the EU passed its Digital Markets Act (DMA), a sweeping set of regulations targeting big tech companies like Apple, Google, Meta, and others. The rules are meant to promote fair competition and allow consumers to choose alternative app stores and payment options on platforms like iOS.

Key Points From Cook-Vestager Meeting

In their meeting this week, Cook and Vestager seem to have covered several major topics related to the antitrust disputes and impending DMA rules:

Topic Details
App Store Split Reports indicate Apple is planning to split the App Store into two sections to comply with DMA requirements – one for Apple’s own apps and services that compete with third parties, and one section for all other apps. This change could happen within months.
Sideloading Access Cook likely faced pressure to allow “sideloading” of apps on iOS – installing apps outside the App Store via methods like web downloads. While details are unclear, sources say Apple is preparing to permit sideloading in some form in Europe to adhere to DMA mandates. Company executives have strongly opposed sideloading due to security concerns.
Alternative Stores The DMA will require Apple allow other app stores to be installed on iOS. Cook offered few details but emphasized Apple’s arguments that its App Store review process maintains high privacy, security, and reliability standards. Vestager stressed allowing competition and choice but acknowledged the need to balance openness against consumer safety.
Fees and Payments Vestager almost certainly raised objections about Apple’s 15-30% commission on in-app purchases. Cook defended the fees, but said Apple is open to changes in commission rates for certain app categories as the DMA is implemented. There was likely also discussion around allowing alternative payment systems in apps distributed through Apple’s store.

In a statement after the meeting, Vestager said she “underlined the importance of the DMA obligations” while also encouraging Apple’s continued security and product investments benefiting European customers and app developers.

Apple Gearing Up For App Store Changes in Europe

In the wake of the meeting, reports indicate Apple is preparing updates for App Store policies specifically for the European market to comply with the DMA within the next couple months, possibly by March.

The company appears set to split the App Store into two sections, implement developer options for enabling sideloaded app installs, allow submissions of alternative “stores” providing iOS apps, and make adjustments to its in-app purchase rules and commissions.

There are still many unknown details and open questions around how Apple will approach these changes. Issues like security prompts and warnings, distribution agreements, store review processes, and fee structures are likely still being worked out internally.

Apple attempted to appeal certain aspects of its DMA designation to no avail. While forced to open iOS and the App Store more widely in Europe, Cook made clear Apple has no plans to expand such reforms elsewhere unless legislated to do so.

Broader Market Impacts

How Apple’s European App Store changes shape up could influence global app economy policies more broadly.

If Apple maintains rigid security policies like limiting sideloading to Enterprise accounts or complex user prompts, it may dampen some of the competition impacts regulators hope to see. However, if alternative stores and payment systems gain meaningful user adoption, it could put pressure on Apple’s commissions and seriously disrupt its services segment revenue.

Developers are anxious to take advantage of new monetization opportunities outside Apple’s payment system. However, the vast majority are unlikely walk away from Apple’s App Store entirely due to the massive user base iOS provides.

Antitrust battles between Big Tech and governments are also heating up in the U.S. and elsewhere. If European reforms successfully balance openness and security on iOS, it could spur other countries and states to push for similar measures.

On the flip side, if data shows a marked rise in malware, fraud, or other issues in the EU from increased sideloading or alternative app stores, that could weaken arguments for platform reforms elsewhere.

What Happens Next

While Apple appears poised to make near-term App Store changes for Europe, tensions with regulators are far from over. Upcoming actions include:

  • Specific DMA Compliance – Apple negotiating details for meeting Digital Markets Act obligations within months
  • Additional EU Antitrust Investigations – Separate probes of App Store policies by the European Commission likely continuing over a longer timeframe
  • Appeals to Courts – Apple potentially challenging specific requirements of the DMA
  • Global Expansion? – Debate around whether market reforms extend to other countries and impact the worldwide iOS ecosystem

Vestager and other European officials have indicated they will closely track functionality and adoption rates around alternative app stores and payment systems within its borders. They could impose additional fines or requirements if desired competition does not occur under the initial policy changes.

Meanwhile, Apple is sure to lobby for limiting the scale and scope of reforms, emphasizing arguments around security risks. Cook urged policymakers not to ignore the “very real threats to privacy and security in requiring sideloading and alternate app stores.”

Where things end up in Europe – and if a radically more open iOS model makes its way there – could shift the playing field between tech giants and regulators worldwide. With trillion-dollar app economy questions at stake, Cook and Vestager likely have many more discussions still to come.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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