Tuesday, March 26, 2024

DMA Non-Compliance Investigations

European Commission (via Hacker News, MacRumors):

Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) 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”.

The Commission suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA.


The Commission has opened proceedings against Apple regarding their measures to comply with obligations to (i) enable end users to easily uninstall any software applications on iOS, (ii) easily change default settings on iOS and (iii) prompt users with choice screens which must effectively and easily allow them to select an alternative default service, such as a browser or search engine on their iPhones.

The Commission is concerned that Apple’s measures, including the design of the web browser choice screen, may be preventing users from truly exercising their choice of services within the Apple ecosystem, in contravention of Article 6(3) of the DMA.


Apple’s new fee structure and other terms and conditions for alternative app stores and distribution of apps from the web (sideloading) may be defeating the purpose of its obligations under Article 6(4) of the DMA.

John Gruber:

You could have set your watch by this announcement dropping the week after the EC held compliance “workshops”. There was no way any of these companies weren’t going to be “investigated” and I doubt there’s any way they won’t eventually get fined. Whether any of them will ever need to pay those fines, that I wouldn’t bet on.


But most of the built-in apps in iOS can be removed from your iPhone the exact same way you delete apps from the App Store. There’s a handful that can’t, among them: Settings, Camera, Photos, App Store, Phone, Messages, and Safari. You can remove those apps from your Home Screen, but they remain in your App Library. If the EC is really going to investigate Apple over removing default apps, I presume they’re thinking that Safari, in particular, needs to be deletable, because making it un-deletable is a form of preferencing? It’s all guess work. I further suppose they might want the App Store app to be deletable, but that’s a problem because it’s through the App Store that a user can re-install built-in apps they’ve previously deleted.


There’s no mechanism for a new browser that was never in the App Store to be included in the choice screen until a year after it becomes popular enough — via sideloading or distribution through alternative app marketplaces — to make the list. But DMA article 6(3) doesn’t actually say that.

Ben Lovejoy:

If that investigation confirms that Apple failed to comply with the antitrust law, then the iPhone maker could be fined up to 10% of its worldwide turnover – increasing to 20% for repeat infringements …


Such investigations take time, but in this case the stated goal is to complete it in less than a year – which is lightning speed by the usual standard.

That won’t be the end of matters, however. If the EU does find Apple non-compliant, the Cupertino company will appeal the ruling, and we will then be set for literally years of court battles as the case works its way up the court hierarchy.

John Gruber:

A few readers have asked about my speculation that Apple, along with the other DMA-designated gatekeepers (none of which are European companies of course), might reasonably pull out of the relatively small EU market rather than risk facing disproportionately large fines from the European Commission.


So EU member states account for only 25–30 percent of Apple’s revenue from “Europe”, and just 7 percent globally. 7 percent is significant, to be sure, and in addition to users, there are of course many iOS and Mac developers in EU countries. I really don’t know what Apple pulling out of the EU would even look like, but it would be ugly.


Update (2024-03-28): John Gruber:

Kara Swisher Interviews Margrethe Vestager

Update (2024-04-01): John Gruber (Mastodon):

The word absolute was a transcription error, however. Listen to the published recording of the call, and it’s clear that what Maestri actually said was specifically in answer to the question: “Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global App Store revenue.”


I struggle to come up with any explanation for why the EU might account for only 7 percent of App Store revenue but significantly more (or less) of Apple’s overall revenue.

11 Comments RSS · Twitter · Mastodon

Old Unix Geek

I'd be surprised if the EU was only 7% of Apple's revenue. It might be only 7% of App Store revenue, but in that case they might need to explain the cause of this discrepancy. The EU might think that is due to App Store restrictions. It might also have to do with poor quality "localization" instead of apps actually designed for the relevant European culture... and Europeans not being satisfied by simply making do the way others might. Despite widespread belief in the US, not everyone on the planet is a temporarily embarrassed American just yearning to be freed of his/her cultural "shackles".

I would love to see Apple pull out of the EU. It would be really interesting.

@Old Unix Geek

> "I'd be surprised if the EU was only 7% of Apple's revenue."

Anyway, why should we believe any number given by a company whose CEO does not even "remember" how many billions Google is paying Apple to be the default search engine in Safari?


"(none of which are European companies of course)"

There are many reasons for that, chief among which is the US lax stance on anti-trust for the last few decades and the creative tax dodging that Apple et al have perfected over the years.

It's one of the spins the anti DMA crowd rely on. "This is targeted at the US". Read the document and what it says about gatekeepers. Now mentions of nations.

How much bigger than 7% could the EU's percentage of Apple's revenue be? Regardless of the number, you can bet that Apple (and Google, and Meta) have had more than one conversation about pulling out of the EU market. And should the EU really be able to fine a company based on a percentage of their global revenue? Seems like that should be limited to their revenue in the EU. I guess once a fine like that has been levied against one of these companies, the resulting appeal(s) will determine that.

Old Unix Geek

@DJ: The EU is the second largest economy in the world after the US and represents 1/6 of the world economy. The US represents 1/4. The EU doesn't have a national preference the way China does for local champions like Huawei. A higher percentage of Europeans can afford an iPhone than people in countries like India. So I'd expect it to be at least twice, and possibly up to 3x larger.

As Kristoffer says, I'd be quite amused if Apple were to leave the EU market particularly since they're slowly gaining share in Europe. The stockholders would probably be equally amused.

Yeah, you could be right. The EU also has a higher population than the US, but a smaller economy. So I wonder where the revenue numbers really fall?

Apple's regional revenue split can be easily found on page 24 of the 10K SEC report.

Net sales for the Europe region (likely including Switzerland and the UK) were 94.3 billion USD, compared to 383.3 billion total. That's hardware sales and services combined. European net sales make up a little less than 25% of total net sales.

The 7 % figure is from the latest earnings conference call, and it's the share of services revenue only.

I had read somewhere that the "Europe region" includes the EU, UK, Russia, Turkey, Ukraine, etc.

@DJ It may have included Russia before 2022… But I doubt that Apple is selling officially anything in Russia these days. Apart from UK where Apple is historically well implanted, you can remove the other additional countries on the European continent from the list.

Apple loves the European market because it has bigger margins than in the USA and Apple is also fond of the European food, especially the double Irish Dutch sandwich.

Ref. https://www.cnbc.com/2024/02/21/two-years-after-apple-quit-russia-over-ukraine-vision-pros-are-for-sale-in-moscow.html

I agree with DJ that trade laws are ridiculously over reaching. The US global sanctions against any company doing business with China being a good example.

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