Apple's iPad doesn't meet DMA criteria, but is getting regulated by the EU anyway

AppleInsider

The European Union has spoken, and will enforce the rules of the Digital Markets Act on Apple again not because it holds a dominant position in the iPad today, but because it may soon.

European Union flags

In a press release issued early on Monday morning, The EU says that there are four criteria that will eventually make Apple a gatekeeper in tablets.

• Apple's business user numbers exceed the quantitative threshold by 11 times -- but this is not a criteria in itself


• End-user numbers are close to the threshold and are predicted to rise in the near future


• End users are locked-in to iPadOS


• Business users are locked-in to iPadOS because of its large and commercially attractive user base

"Business users" as a class is not defined in the mandates of the Digital Markets Act (DMA) as a specific dominance criteria. The only criteria that matters quantitatively to the regulation is the end-user figure.

It's not clear why the EU added it as a criteria for the purpose of this measurement. The EU's lead anti-competition regulator Margrethe Vestager admits that Apple doesn't meet the criteria for enforcement, but will soon.

So, they decided to regulate anyway. Apple has six months to bring iPadOS to compliance under the DMA.

"Today, we have brought Apple's iPadOS within the scope of the DMA obligations," said Vestager. "Our market investigation showed that despite not meeting the thresholds, iPadOS constitutes an important gateway on which many companies rely to reach their customers."

Beyond Monday's announcement about the iPad, the EU has several investigations underway. On March 25, the Commission opened non-compliance investigations into Alphabet's rules on steering in Google Play and self-preferencing on Google Search, Apple's rules on steering in the App Store and the choice screen for Safari, and Meta's "pay or consent model."

Furthermore, it looks like Booking, ByteDance, and X may fall under the DMA thresholds. An investigation on the trio will be completed by mid-May.

Apple's DMA compliance, and complaints

On January 25, Apple revealed its changes that came into effect in March to comply with DMA. For all users, Apple will notarize all iOS apps, regardless of where they're sold.

Developers will be able to offer their own app marketplace in the EU, but they must be approved by Apple and use a human review process. Those stores are also responsible for their own refunds, but they can use alternative third-party payment processors.

At the same time, Apple is changing its fee structure, reducing the standard commission of 30% down to 17%. For apps that stay within the App Store, there will also be a 3% fee for using Apple's payment processing services.

Controversially, all apps not sold via the App Store will be subject to a Core Technology Fee of 0.50 Euro per first-install of an app annually. This is waived for the first million installs, and developers can opt to remain in the App Store and continue to pay nothing for free apps.

The EU is empowered to impose one-off fines of up to 10% of a company's worldwide turnover -- and 20% for repeated infringements. The European Commission can also force companies to sell off their businesses, or part of them.

Apple's proposals have, naturally, attracted complaints. Spotify CEO Daniel Ek called the fees "extortion, plain and simple." Spotify does not pay Apple a large percentage of its revenue, as it removed the ability to pay with a subscription through the App Store years ago.

Epic Games CEO Tim Sweeney referred to it as "hot garbage" and a "devious new instance of malicious compliance."



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VictorMortimer

Nice!

Apple's behavior has been absolutely horrendous for years.  The EU (and the rest of the world) needs to demand normal software installation on ALL computers, and that includes iPads, phones, watches, and game consoles.

The DMA doesn't go far enough, but it's a good first step.

beowulfschmidt

Benito would be proud.

foregoneconclusion

According to the Verge, iPadOS App Store only has 23 million active monthly users in the EU. DMA requires 45 million active monthly users. Not sure how the EU can then claim the user part of the equation is going to meet the DMA requirements in the near future.

https://www.theverge.com/2023/4/28/23702159/apple-app-store-user-numbers-europe-eu-dsa-ios

skippingrock

I met someone that works for Epic what they thought about the whole Apple vs Epic debate. “No comment”, is all you get. That is all they’re allowed and told to say. 

gengel

If Apple stopped selling iPads in EU, people would always find a way to get them. Travel in the UN is that short. EU will encroach on Apple until they’re on Apple’s Board of Directors. It has to stop! Draw that line in the sand NOW!

badmonk

VictorMortimer said:

Nice!

Apple's behavior has been absolutely horrendous for years.  The EU (and the rest of the world) needs to demand normal software installation on ALL computers, and that includes iPads, phones, watches, and game consoles.

The DMA doesn't go far enough, but it's a good first step.

And whose responsibility will it be when these devices become unbootable and unusable due to software incompatibility?  Just asking questions here since you seem to have all the answers.

lam92103

Na, this is BS. I will bitch at Apple when they deserve it, but being obligated to allow third party OS on iPad is too much.

badmonk

I doubt the EU will achieve their aims of having a flourishing tech industry with this degree of over-regulation and what seems to be mere politcally motivated persecution of American companies.

The USA should counter this EU over-regulation with negotiation but they seem to be more interested in beating up on big tech as well.  And the EU should worry more about protecting their own industries from Chinese dumping, in particular EVs which are being stockpiled in EU ports.

The big tech pile-on by governments is starting to look like a moral-panic.  Maybe AI is the real issue they should be focused on.

teejay2012

I wanted to write something in response to this article, but it is really pointless. There is no middle ground. Either Apple is the worst company in the world, abusive to all, non innovative, not deserving of any profit and whatever the EU does to harm them is fine. You see the comments here that reflect this view.  OR you are angry or in disbelief on how the EU regulators are trying to hobble successful US tech companies.. because they can. I am in the latter camp, and while I am ok with regulations that limit illegal behaviour, I am not in support of punitive actions that are falsely presented as consumer supportive. Now the iPad is being targeted yet it fits in none of the criteria. They are literally making it up as they go.

freeassociate2

If your economy is stagnant, leech off someone else’s. That seems to be the EU’s prevailing philosophy.

Maybe they should give a listen to Stiglitz.
https://books.apple.com/us/audiobook/rewriting-the-rules-of-the-european-economy/id1643306074

longpath

So they write a law, with objective criteria (which may well may be utter BS, but they at least are objectively defined) and then they violate that objective criteria, so it is clear that the law doesn’t matter to the political class. It’s just an excuse to skim from the productive class.

red oak

How can this possibly stand up on appeal?    They literally demand it even though iPad does not meet the thresholds.   How stupid is this 

ihatescreennames

The EU is going full Minority Report. It’s the Pre-crime Division punishing Apple now for a law they have determined Apple will violate sometime in the future. 

Xed

I'm all for Apple pulling out of the EU completely until this BS is resolved and they can be treated fairly. I don't care that it would hurt the stock a little, this kind of focus abuse by an overreaching regime is only going to open Apple to more abuse in the future. Give 'em an inch, they take a foot, and before you know it you don't have a leg to stand on.

avon b7

ihatescreennames said:

The EU is going full Minority Report. It’s the Pre-crime Division punishing Apple now for a law they have determined Apple will violate sometime in the future. 

I'm not sure that is the case here. Perhaps something is getting lost in the translation. 

I don't have the texts to hand and don't have time to locate them but I did read through (at the time) the EU evaluation of Apple's self assessment for DMA and Apple's reasoning for excluding certain products from DMA. 

What was clear from that was the Gatekeeper label wasn't hard wired to just a couple of absolute numbers. There was another side to things too where more context was required. 

Off the top of my head it was more a combination of different factors, CPS obviously being on of those along with (IIRC) article 17 of the law. Then 'Safari' (web access control) was in there and another too. I definitely remember that the word 'foreseeable future' was in there with reference to future platform numbers. 


Either way, if there is anything like the article is indicating, I'm sure Apple will be able to take effective action against it.