Spain Initiates Antitrust Investigation into Apple’s App Store

Apple is facing a new antitrust issue in Europe, as the Spanish competition watchdog, CNMC, has initiated a probe into the App Store’s operations. The investigation focuses on allegations that Apple may be leveraging its platform to enforce unfair conditions on developers looking to distribute their apps to iOS users.

Although specific details are scant, a press statement from the CNMC [translated from Spanish] mentions that: “Apple is suspected of engaging in practices that stifle competition by subjecting developers who wish to distribute their applications through the App Store to unfavorable terms.”

The duration of this investigation by Spanish authorities could extend up to two years, and its findings are currently uncertain. Should Apple be found in violation of antitrust regulations, it could face fines amounting to as much as 10% of its worldwide yearly revenue, translating to billions of euros.

For a long time, developers have voiced their dissatisfaction with Apple’s App Store policies, criticizing issues such as the high fees charged on in-app purchases, its proprietary payment system, and the opacity of its app review and broader App Store governance practices. Many have accused Apple of making arbitrary and unjust decisions.

Apple maintains that it enforces clear, uniform rules for iOS developers to ensure that the App Store remains a secure and premium environment for mobile users. The company also asserts that it does not take any commission from over 90% of the App Store’s revenue (sales and billings), which directly benefits the developers.

In response to the CNMC’s scrutiny, Apple, through spokesperson Emma Wilson, expressed its intention to “continue cooperating with the Spanish Competition Authority to address and resolve their quizzer.”

Lately, European antitrust authorities have been more proactive in challenging the practices of Big Tech companies, leading to increased regulatory challenges for Apple. This includes being fined €1.84 billion by the EU in March over practices related to music streaming apps and a recent agreement in July requiring them to facilitate contactless payments on iOS devices.

Furthermore, Apple’s compliance with new European competition statutes is under the microscope. Earlier this year, the European Commission initiated an investigation into the App Store for potential violations of the Digital Markets Act (DMA), a set of preemptive competition regulations across the EU, which includes severe financial penalties for non-compliance.

The Commission has preliminarily determined that Apple’s anti-steering provisions infringe upon these regulations. Additionally, it started a separate inquiry into Apple regarding a new charge, known as the Core Technology Fee (CTF), imposed on developers who agree to terms that include DMA privileges. This investigation by the Commission is ongoing.

The EU is also examining Apple’s adherence to a DMA mandate that necessitates allowing access to third-party app stores and whether the tech giant has made it difficult for iOS users to download and utilize these alternatives compared to its own App Store, potentially contravening the DMA’s goals. The decision now rests with the Commission.

Moreover, Apple might face additional regulatory pressure as the U.K. plans to enact its own competition reforms targeting Big Tech.

With the increase in antitrust actions against Apple concerning its ecosystem practices, litigation financiers are beginning to take an interest as well.