Apple Rosenthaler Strasse – Image Credit: Apple
Apple has lost an appeal in Germany on how much it dominates the smartphone market, and is now staring down antitrust penalties in the country on top of everything else it faces in the European Union.
As such, Apple is now subject to penalties in accordance with anti-competition law in Germany. On Tuesday, judges from the Federal Court of Justice issued a ruling after a one-month deliberation, declaring that Apple should be applied additional controls to encourage competition in the German market.
Presiding judge Wolfgang Kirchhoff said that an assessment has shown that Apple has too much control across multiple markets, and should be subjected to additional controls, reports Reuters.
Apple’s legal team asked for the court to discuss the matter with the European Court of Justice in Luxembourg ahead of making a decision, on the belief that EU and German law don’t necessarily line up. Judge Kirchhoff said the judges failed to see any grounds for such contact to be made.
Federal judges ruled that Apple’s 2023 designation as a “company of paramount cross-market significance for competition” stands.
Controls and fines are likely as a result of the ruling. Exactly how harsh the penalties will be remains to be seen.
Competition checks
The lawsuit was instigated by the Bundeskartellamt in April 2023, with the regulator believing that Apple was subject to a 2021 amendment to the German Competition Act. Section 19a of the act, which came into force in January 2019, adds more controls and checks for companies that are seen as breaking German antitrust law.
Following the addendum, the regulator was quick to start an investigation using its new powers into the App Store and Apple’s activities.
With control of iOS and the App Store, Apple therefore “holds a key position for competition,” according to German law.
Apple’s lawsuit aimed to defeat the regulator’s original decision, and therefore allow Apple to operate without the extra checks to prohibit anti-competitive practices. The designation will stand until April 2028.
The legal fight is also separate from the regulator’s other Apple-related activities. In June 2022, it launched an antitrust investigation into Apple over App Tracking Transparency, specifically complaints that ATT rules that applied to third-party app producers didn’t apply to Apple itself.
Germany’s activity also follows after years of attempts by the EU and other governments to curtail the power of tech giants in the marketplace.
The most recent attempt are the Digital Markets Act and Digital Services Act, a set of rules to try and force gatekeepers to act in a competition-promoting way.
This included forcing Apple into allowing third-party App Store alternatives onto the iPhone in the EU, and eliminating anti-steering rules. Changes that Apple dragged its heels over, but eventually relented in some cases.
