Apple Fears That The European App Store Regulation Could Opening A Pandora Box

Apple Fears That The European App Store Regulation Could Opening A Pandora Box

What just happened?

Developers and regulators argue that Apple's control of its App Store, including banning downloads of unpublished apps, narrows user choices and forces software manufacturers to pay Apple for services such as payment processing they can do more cost-effectively on the retail market, which has previously said would force Apple to allow "sideloading ". (1) 

What does this mean?

CEO Tim Cook previously said he had to allow Apple to "sideload" or install iPhone apps from the Internet rather than the Apple App Store. Typically, Federighi ignored the potential financial implications for Apple on Wednesday. (2) 

The remarks made at the Lisbon, Portugal web summit on Wednesday represent an escalation of Apple's rhetoric about what could go wrong if Apple were forced to change app store policies. (3)

Antitrust officials are also looking into Apple's European tax cases as well as Starbucks that puts US multinationals at the centre of concerns about low-cost corporate tax treaties with smaller EU states. The Commission argued that this could violate EU antitrust rules prohibiting abuse of market dominance and restrictive business practices. The Commission said that it will consider certain items included in Amazon's contracts with publishers. (4) 

Epic claimed in its lawsuit that Apple broke antitrust laws by forcing developers to use its payment system and preventing them from informing app users about alternative payment methods. The ruling also kicked off a celebration among developers who said the ruling would allow them to avoid Apple's 30% - commission on in-app purchases. While Facebook was busy checking the damage, Telegram and Signal benefited from angry users flocking to their apps. (5)

How does this impact the legal sector?

In Friday's ruling, a California federal judge generally sided with Epic, issuing a permanent ban on Apple's app store policies and opening up the ability for developers to offer third-party payment options in apps. Apple's so-called Steering Prevention Policy limits the ability of apps to inform customers about payment options outside the App Store. The judge ruled that Apple can no longer prevent app developers from directing users to payment methods outside the App Store. (6)

The decision, made after a controversial legal battle with the creator of the enormously popular video game Fortnite, is a blow to Apple, but the company also won a partial victory after the judge said Apple violated California's unfair competition law by forcing Fortnite and its maker Epic Games to use Apple's App Store payment systems. The judge did not require Apple to authorize its Apple app store to be used in the process. (7)

The ordinance significantly expands on the concession made last week to video streaming companies by allowing them to direct users to external payment methods. This decision covers all developers, including game developers, who are the largest sources of revenue for the Apple App Store, which is the backbone of its $ 53.8 billion service segment. The judge ruled that Apple can no longer prevent developers from providing buttons or links in their apps that lead customers to other payment methods than Apple's in-app purchases. (8)

Developers can now use information from their apps such as an email address to connect with their customers and encourage them to pay directly instead of through Apple. The ruling also stated that Apple could not prevent developers from communicating with customers through contact information obtained from developers when registering customers in the application. (9)

The case is the result of an investigation launched in June by the European Commission on Apple devices that disadvantage competing music streaming services and deprive users of cheaper music streaming options and distorting competition. This is not the first time the Apple Store caught wind to a legal battle with app developers. In the past, Spotify has filed a formal complaint against Apple in March 2019 claiming that by forcing developers to pay fees for an app such as a Spotify subscription, Apple artificially inflated prices while competing with Spotify through Apple Music. (10)


The Legists Content Team

Assessing Firms:

#Freshfields Bruckhaus Deringer LLP #Linklaters LLP #Slaughter and May #Allen & Overy LLP #Clifford Chance LLP #Herbert Smith Freehills LLP #Ashurst #Baker McKenzie #Hogan Lovells International LLP #Latham & Watkins #Macfarlanes LLP #Norton Rose Fulbright #Pinsent Masons LLP

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