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    One bad Apple can spoil whole mobile apps market – German cartel watcher


    Bundeskartellamt reads it the Competition Act

    Germany’s Cartel-watch agency Bundeskartellamt has judged that Apple could be applying cartel pressure with a profound significance for competition across Germany’s tech markets and launched a new investigation that could end in action against it. Apple and its subsidiaries are subject to extended abuse control pursuant to Section 19a of the German Competition Act (GWB), an amendment to Germany’s competition act. In a two step process the Bundeskartellamt can prohibit companies from engaging in anti-competitive practices.

    “Apple has an economic position of power across markets which gives rise to a scope of action that is not sufficiently controlled by competition,” said Andreas Mundt, President of the Bundeskartellamt. Apple’s iPhone gives it omnipotence over a wide-ranging digital ecosystem which is of great importance to competition throughout Europe and the world. Its proprietary products like iOS and the App Store make it the supreme gatekeeper over access to the ecosystem and Apple customers. “This decision enables us to specifically take action against and effectively prohibit anti-competitive practices,” said Mundt.

    Specific practices used by Apple have alerted the Bundeskartellamt to its tracking rules and the App Tracking Transparency Framework in a previous proceeding in June 2022. The German authority said it is particularly suspicious that these rules favour Apple’s own offers and impede others. So far, no decision has been taken on initiating further proceedings against Apple.

    With a $400 billion turnover and profit nearing $100 billion in 2022, Apple is an apex predator in technology, dominating the entire value chain relating to high-quality mobile digital end devices, while developing its own central components, such as processors. While Apple develops the software, especially mobile operating systems like iOS, for itself, the same applies to the platform for mobile software distribution on the devices, the App Store, argues Mundt. Apple’s offer is complemented by a number of other hardware, software and service products but it holds a dominant position on all vertically related levels based on its smartphones, tablets and smart watches.

    Based on this tight proprietary vertical structure and an installed base of more than 2 billion active devices worldwide, Apple is active in many ways on market levels and business areas that are linked to each other. It is therefore in a position to tie its users to its complex ecosystem on a long-term basis, said Mundt. This is associated with a strong power to set rules for third parties, above all for app developers.

    The validity of the Bundeskartellamt’s decision is limited to five years in accordance with statutory provisions and a case summary of its decision can be accessed here. Prior to the proceeding against Apple the Bundeskartellamt had already determined the paramount significance across markets of Google owner AlphabetMeta AKA Facebook and Amazon. Another proceeding was initiated against Microsoft.