Apple has a new antitrust headache in Europe: Spain's competition authority, the CNMC, said Wednesday it was opening an investigation into Apple's App Store, citing concerns that the iPhone maker may be imposing unfair trading terms on developers who use its store to distribute software to iOS users.
Few details were released about the nature of CNMC's concerns, but the agency wrote in a press release: [in Spanish; this is a machine translation] “Apple may be engaging in anticompetitive behavior by imposing unfair trade terms on developers who use Apple's App Store to distribute applications to users of Apple products.”
The Spanish investigation could take up to two years to complete, and its outcome is still unknown, but if the CNMC finds that Apple has violated competition rules, it could face fines of up to 10% of its annual global turnover, or billions of euros.
Developer complaints about how Apple runs its App Store have been a frequent theme on iOS for years, including the levels of fees the company charges for in-app sales and the use of its payment technology, as well as its decision-making processes for app review and broader governance of the App Store, with the company facing accusations from some developers that it makes arbitrary and unfair decisions.
Apple, on the other hand, maintains that the App Store applies clear and consistent rules to iOS developers to ensure a safe, high-quality experience for mobile users, and that the vast majority (over 90%) of App Store revenue (charges and sales) is returned to developers without Apple taking any fees.
In response to the CNMC's investigation, Apple spokesperson Emma Wilson issued a statement saying the company “continues to work with the Spanish competition authorities to understand and respond to their concerns.”
In recent years, European antitrust enforcement agencies have increasingly stepped in and confronted big tech companies, which have seen a growing number of regulatory problems for Apple, including a €1.84 billion EU antitrust fine imposed in March over anti-steering practices regarding music streaming apps and a settlement agreement earlier this month that forced Apple to open up contactless payments on iOS.
The introduction of new competition rules in Europe is also creating new headaches for the iPhone maker: Earlier this year, its App Store came under investigation by the European Commission for possible violations of the Union's Digital Markets Act (DMA), an EU-wide ex ante competition reform law that carries fines of 10% of turnover or more for non-compliance.
Last month, the European Commission announced preliminary findings that Apple's anti-steering rules violate the scheme. The Commission also launched an additional investigation into Apple over a new fee (also known as the Core Technology Fee, or CTF) that applies to developers who accept a version of its business terms that allows them to take advantage of DMA rights. The Commission's investigation is still ongoing.
Additionally, the EU has said it is investigating how Apple complied with the DMA's requirements to allow third-party app stores.
The developers argue that the tech giant is making it harder for iOS users to download and use these alternative marketplaces compared to the native experience they get from accessing Apple's App Store, which they believe goes against the intent of the DMA.Once again, arbitration will be left to the European Commission.
Moreover, special local anti-abuse restrictions for Apple appear looming as the UK plans to pass its own competition reform bill focused on big tech companies.
And all of these antitrust lawsuits targeting Apple's treatment of ecosystem developers are attracting the attention of litigation funders.