CMA Launches Probe Of Apple’s App Store Policies

Apple is facing another official investigation after the UK’s Competition and Markets Authority (CMA) confirmed a probe.

The CMA said it had launched an investigation into Apple following complaints that its terms and conditions for app developers are unfair and anti-competitive.

It comes after the European Commission in June last year also opened two formal antitrust investigations into Apple, over its App Store and Apple Pay.

Fortnite clash

Many developers are unhappy with the 30 percent commission Apple exacts from digital purchases, which in 2019 contributed $61bn to Apple’s revenue stream.

Indeed, in June 2019 Apple was hit with a lawsuit in the US from two app developers, who alleged that the App store gives the iPad maker a monopoly on the sale and distribution of iOS apps.

But perhaps the most noteworthy challenge to Apple came last year from Epic Games, the developer of the computer game Fortnite.

Apple removed Fortnite from its app store last August over a dispute, which revolved around app store charges that Epic argued is unfair.

Epic had introduced a feature into Fortnite allowing users to bypass Apple’s in-app payment systems for the purchase of the game’s virtual currency.

Apple responded by removing the game from its app store, and later removed Epic’s developer account. Apple has also counter-sued Epic.

Epic argued the cut taken by app stores for in-app purchases, typically 30 percent, is excessive.

And Epic last month filed an antitrust complaint against Apple with the European Commission, over the matter.

Last week the UK’s Competition Appeal Tribunal, ruled that while Epic Games cannot not take Apple to court in the UK, it could however pursue legal action in the UK against Google.

CMA investigation

Into this comes the news that the UK’s Competition and Markets Authority (CMA) has opened an official investigation.

The CMA said it probe had been prompted by the CMA’s internal work in the digital sector, as well as several developers who reported that Apple’s terms and conditions are unfair and could break competition law.

“All apps available through the App Store have to be approved by Apple, with this approval hinging on developers agreeing to certain terms,” said the CMA. “The complaints from developers focus on the terms that mean they can only distribute their apps to iPhones and iPads via the App Store. These complaints also highlight that certain developers who offer ‘in-app’ features, add-ons or upgrades are required to use Apple’s payment system, rather than an alternative system.”

The CMA said that its investigation will consider whether Apple has a dominant position in connection with the distribution of apps on Apple devices in the UK – and, if so, whether Apple imposes unfair or anti-competitive terms on developers using the App Store.

“Millions of us use apps every day to check the weather, play a game or order a takeaway,” said Andrea Coscelli, chief executive of the CMA. “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.”

“Our ongoing examination into digital markets has already uncovered some worrying trends,” said Coscelli. “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.”

The CMA said that it will continue to coordinate closely with the EC investigations into Apple.

US State action

Meanwhile Apple is also facing action over its App Store terms and conditions in certain US states.

Arizona’s state House of Representatives has this week passed a law that prevents both Apple and Google, and any other app store exceeding one million downloads, from demanding developers based in the state exclusively use its app stores.

This law has to be approved by the state Senate.

This Arizona law had been lobbied for by the ‘Coalition for App Fairness‘, which had been formed last September by Epic Games, Spotify, Deezer and others.