Apple must take another brick from its wall, says EU

The European Union wants to break down the wall surrounding Apple’s proverbial garden as new laws target Big Tech.

Apple, EU, DMA, Digital Markets Act, regulation, app store
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The European Union (EU) wants to break down the wall surrounding Apple’s proverbial garden, as new laws targeting Big Tech may force the company to support third-party app stores on its devices.

Another brick from the wall

The EU’s Digital Markets Act (DMA) demands a lot. It aims to level the playing field for internet services and is the latest in a global wave of regulation to hit the tech sector.

“The DMA will change the digital landscape profoundly,” said Executive Vice pPresident Margrethe Vestager. “A small number of large companies hold significant market power in their hands. Gatekeepers enjoying an entrenched position in digital markets will have to show that they are competing fairly.”

The Act will require a lot from Apple. “If you have an iPhone, you should be able to download apps not just from the App Store, but from other app stores or from the internet,” Gerard de Graaf, EU director of the Silicon Valley office, told Wired

In other words, Big Tech will be forced to open up platforms.

De Graff has opened an EU office in San Francisco to meet with affected tech firms. Apple continues to face action on the matter of App Store payments and this is more in the same direction.

The law may even force Apple to make changes in Messages, FaceTime, and Siri. It even seems possible it may also be forbidden from shipping preloaded apps and may be forced to share data with third-party firms.

Apple warns of privacy and security threats

Apple has previously expressed its fear that some of the act’s provisions may create “unnecessary privacy and security vulnerabilities” for its customers. But it appears the EU turned a tin ear to those pleas.

It also seems reasonable to anticipate legal challenges to sections of these new rules and how they are applied, particularly where there is an inconsistency between the requirements of the DMA and other existing statutes. After all, what’s more important, customer privacy or advertising data sharing? Given the EU has rules on both, which law comes first? GDPR or DMA?

Bits of this action will likely run for a while.

The timetable for enforcement

The DMA went into effect on Nov. 1, but its requirements are not yet effective. Tech firms now have until May 2023 to begin to adjust their business models and may have to put changes into effect by March 6, 2024.

It is also important to note that some of the more advanced requirements of the DMA, such as video calling between different platforms, won’t need to be implemented until 2026, at the earliest.

In the meantime, all of the companies affected by the DMA will no doubt do everything possible to mitigate elements of the act. Even then, one early impact on certain parts of Apple’s business suggests iOS 17 may be a weird upgrade that tears existing apps and services apart, rather than improving them.

That’s going to mean….

The tyranny of choice

I consider it likely we will see the introduction of a range of new choice-based application installations (“Do you want to install Safari, Chrome, Edge, Firefox, or Duck Duck Go on your new iPhone?”)

Watch those choice boxes as these will become more important further down the line as it is likely these will propagate across every operating system, as noted by Amelia Fletcher, professor of competition policy at the University of East Anglia.

Most of us will quickly develop "choice fatigue."

It's not just about Apple

Apple isn’t the only company in the regulatory cross hairs. Amazon, Google, Meta, and others will also need to change. The penalties are significant, too — fines of up to 10% of a company’s total annual turnover can be imposed, along with hefty fines and additional financial penalties.

Businesses can also be forced to sell parts of their business, or denied access to new business sectors, the EU explains here.

What’s this all about?

The idea behind the DMA is to force major internet firms — "gatekeepers" — to open to competition, and to ensure larger platforms are obliged to act as responsible corporate citizens. Companies must be of significant (€7.5b) market size and must provide core platforms across at least three EU states to more than 45 million active end users.

Those companies identified as gatekeepers, including Apple, will face a strict series of requirements. They will need to implement a range of changes, including:

  • Ensuring end users can easily unsubscribe from core platform services or uninstall pre-installed core platform services.
  • Stopping the installation of software by default alongside the operating system.
  • Providing advertising performance data and ad pricing information.
  • Permitting use of alternative in-app payment systems.
  • Permitting end users to download alternative app stores.

All of these are likely to ding Apple’s business. The high-profile challenges will be the requirement to support third-party app stores and to support alternative payment services, but the demand for certain kinds of ad related data may impact its work on user privacy.

I’m not particularly convinced that requiring Apple to ship operating systems without some core apps will turn out to be of any significant benefit to most users.

Apple will comply, probably reluctantly

Apple may resist the designation of gatekeeper, of course, but it is hard to see how a company with such a huge chunk of the PC, mobile, and tablet markets will be able to justify that argument. In the event it did so, the EU may investigate the company and levy fines.

With that in mind, it’s most likely Apple will be forced into compliance, just as feels it has been driven to move to USB-C in future products. The passing of the DMA in the EU also hints that similar legislation in the US may also come into effect, given that both the US and EU tend to cooperate on most such matters.

What the impact will be on users is hard to predict. I’m not convinced that swapping a slick user experience for an extensive round of multiple choice tests will make most users much happier, but perhaps I’m too hasty.

I do think it will be a nightmare for Apple’s user interface designers, who will want to save as much user-focused convenience as possible, while embracing third-party services built around completely different philosophies. But at least Apple will be able to offer its software and services via competing platforms, if it so desires.

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Copyright © 2022 IDG Communications, Inc.

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