Yahoo Finance UK regulator to investigate Apple over 'unfair' App Store terms
Britain’s competition regulator has opened an investigation into Apple over claims the company is using its control over the App Store to impose “unfair and anti-competitive” terms on app developers.
The Competition and Markets Authority announced the investigation on Thursday morning. It says it decided to investigate based on its own work in the digital sector, “as well as several developers reporting that Apple’s terms and conditions are unfair and could break competition law”.
“Millions of us use apps every day to check the weather, play a game or order a takeaway,” said Andrea Coscelli, the CMA’s chief executive. “So, complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice – potentially causing customers to lose out when buying and using apps – warrant careful scrutiny.”
The iOS App Store is the only way to install apps onto iPhones, iPads and Apple Watches, meaning the terms Apple sets for developers have huge sway. Developers must pay between 15% and 30% of their revenue to Apple if they sell digital goods through the App Store, for instance, and are largely banned from launching services that require a subscription to work, unless that subscription is made available through Apple’s payment processing service, which charges 15% or more to use. The company argues that these practices are necessary to guarantee the apps that iPhone owners download are secure and safe.
Apple said: “We created the App Store to be a safe and trusted place for customers to download the apps they love and a great business opportunity for developers everywhere. In the UK alone, the iOS app economy supports hundreds of thousands of jobs, and any developer with a great idea is able to reach Apple customers around the world.
“We believe in thriving and competitive markets where any great idea can flourish. The App Store has been an engine of success for app developers, in part because of the rigorous standards we have in place – applied fairly and equally to all developers – to protect customers from malware and to prevent rampant data collection without their consent. We look forward to working with the UK Competition and Markets Authority to explain how our guidelines for privacy, security and content have made the App Store a trusted marketplace for both consumers and developers.”
The investigation is just part of the CMA’s broad look at the tech sector, which includes the creation of the Digital Markets Unit, announced in November 2020. That organisation will be the first of a number of attempts by the UK government to set up a new regulatory regime for the tech industry.
“Our ongoing examination into digital markets has already uncovered some worrying trends,” Coscelli added. “We know that businesses, as well as consumers, may suffer real harm if anti-competitive practices by big tech go unchecked. That’s why we’re pressing on with setting up the new Digital Markets Unit and launching new investigations wherever we have grounds to do so.”
Initially prompted by an investigation into the online advertising market, the DMU will ultimately cover companies with “strategic market status”, defined as “substantial and enduring market power”. Google and Facebook were all but certain to be covered by the regulator, but it was unclear whether other large tech companies, including Apple and Amazon, would be regulated in the same way.
