Germany's Bundeskartellamt (Federal Cartel Office or FCO) antitrust authority today announced that Apple is subject to "extended abuse control" under the German Competition Act, which means that German regulators can prevent the company from engaging in "anti-competitive practices."
FCO president Andreas Mundt said that Apple's economic position is not adequately controlled by competition, giving German authorities the right to step in.
Apple has an economic position of power across markets which gives rise to a scope of action that is not sufficiently controlled by competition. Based on its mobile end devices such as the iPhone, Apple operates a wide-ranging digital ecosystem which is of great importance to competition not only in Germany, but also throughout Europe and the world. With its proprietary products iOS and the App Store, Apple holds a key position for competition as well as for gaining access to the ecosystem and Apple customers. This decision enables us to specifically take action against and effectively prohibit anti-competitive practices.
In the press release, the FCO says that Apple's two billion device active install base gives it a "strong power" to create rules for third parties, with Apple exerting control over customers and access to customers. Combined with Apple's resources, Apple is in a "position of power" that makes it subject to the aforementioned "special abuse control." This designation is valid for five years.
German regulators are already looking into Apple's ad tracking rules and App Tracking Transparency, a measure that requires apps to get explicit user consent before tracking them. The investigation began in 2022 with the aim of determining whether Apple's anti-tracking technology is anti-competitive.
At the current time, the FCO has not decided whether to initiate further proceedings against Apple. Alphabet/Google, Meta/Facebook, and Amazon have previously been subject to these rules. A 2021 amendment to the German Competition Act provided the FCO with the power to "intervene early and more effectively" to prevent major tech companies from engaging in anti-competitive practices.
In a statement to MacRumors, Apple said that it plans to appeal the decision, and that it does not agree with some of the claims used to classify the company as in a position of power.
Apple is proud to be an engine for innovation, job creation, and competition in every market where we operate. The FCO’s designation misrepresents the fierce competition Apple faces in Germany, and it discounts the value of a business model that puts user privacy and security at its core. While we will continue to work with the FCO to understand their concerns, we plan to appeal their decision.
Apple said that the FCO is not presenting an accurate picture of the hardware market in Germany, and that the decision is not based on Apple's true competitive significance. Despite the FCO's claims that Apple's ecosystem limits customer choice, Apple says that iPhone and iPad are not stuck with the Apple ecosystem, but rather choose to use Apple products due to loyalty to the company.
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Top Rated Comments
In a specific case, the Cartel Office is investigating Apple's App Tracking Transparency Framework. This ties the tracking of user behavior for third-party app providers to certain conditions and is particularly important for app providers whose offerings are financed with advertising. "In particular, the Bundeskartellamt is investigating the initial suspicion that these regulations give preferential treatment to Apple's own offers," the authority explained.
How many active devices does Apple have in Germany? Using the worldwide number as rationale for controls in Germany is poor rationale. For example, if Apple has 2 billion active devices in the world but only 50 in Germany, using the world number to allow extra control (investigation) of Apple's actions in Germany would be more than heavy-handed. Of course, the reality is there are more active Apple devices than that in Germany but using market share outside of a country for within-country regulations comes across as overreach, at best.