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What the EU's crackdown on Apple means for Epic

Europe's definition of Apple's market could face skepticism in the U.S. courts.

App Store scales

How to define Apple's market could be key to Epic's case.

Image: Jernej Furman/Protocol

Apple for years has mostly been able to keep its head down and let antitrust complaints hit other big tech rivals, such as Google. That time, however, has ended.

The App Store is now the target of complaints worldwide: The European Commission filed antitrust charges today claiming Apple abuses its position in the market for music apps, after years of investigating a complaint by Spotify, which competes with Apple Music. The commission also promised to dig into other aspects of the App Store, all just a few days after the Australians worried aloud about the same thing, and a few days before Apple heads to trial with video game maker Epic over, yes, the App Store.

Epic might be launching into a victory dance over the complaint, but European regulators' conclusions would likely be more contentious in a U.S. court.

To begin with, antitrust scholars note that the European Commission found the Apple App Store doesn't routinely compete with Google's Play Store or other ways of distributing digital content — a contention courts in the U.S. likely won't accept blindly.

"It is much less likely that American courts would find that App Store apps do not compete with Google Play apps," said Chris Sagers, a professor at Cleveland State University's law school and the author of a book on Apple's prior antitrust woes. "It seems very significant" in the Epic case, he said.

Market is at the heart of many antitrust complaints, so if the App Store competes with Google, Apple's market share probably isn't big enough for it to get in trouble as a monopoly. Not surprisingly, Apple hammered this point in its filings in the Epic case.

U.S. courts are generally reluctant to say that a company has a monopoly in the market for its own product. It's not forbidden, though, and antitrust practitioners are increasingly asking whether the difficulty of switching to other goods and services mean digital markets are narrower than they might otherwise appear.

"Sometimes we have narrow market definitions because it's very difficult to find an alternative," said Charlotte Slaiman, competition policy director at Public Knowledge, which pushes for increased antitrust enforcement in tech. "That's valid."

Apple products integrate with one another more seamlessly than with other devices, and many users might want to maintain their existing app libraries, both of which may mean customers feel too locked in to switch even in pursuit of better options or cheaper prices, said Slaiman, also a former lawyer at the Federal Trade Commission.

"Owners of an Apple device are not likely to switch to another device with Google Play Store just because music streaming is more expensive on the Apple App Store," the commission's executive vice president, Margrethe Vestager, said in her statement.

Lock-in

Tech companies often say that users can choose alternative services as easily as they might shop from another shelf at a supermarket.

"At the core of this case is Spotify's demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows," Apple said in a statement responding to the commission. The company has also said the 30% commission it takes on many in-app purchases is an industry standard that allows it to ensure privacy and security in its App Store, which in turn helps millions of apps reach consumers.

Enforcers increasingly wonder if, instead, it's more like the alternatives are 10 feet up on a shelf in a dark store the next town over. If they are, then Apple is effectively controlling the market, and Epic, Spotify and a growing number of other developers say Apple is using that control to disadvantage rivals, extract its 30% fee in the process and cut off any app that tries to steer consumers to cheaper options.

"That just sort of reinforces the market power that Apple already has over a major form of distribution," said Diana Moss, president of the American Antitrust Institute.

The result, Epic and others say, is more expensive apps, fewer choices and more money going into the pockets of Apple than it should receive in a competitive market.

Of course, market definition is necessary, but not sufficient, to antitrust cases. Proving competitive foreclosure and harm to consumers are both key as well. The European "statement of objections" is also just one step in investigating potential violations, and Apple is expected to reply more formally.

"This is an early step," Slaiman noted. "I wouldn't say that this is an indication of how a U.S. case would turn out."

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