Topline

Apple’s tablet operating system counts as a digital “gatekeeper” under the European Union’s strict new technology rules, the European Commission said on Monday, a development that could force the tech giant to change how it operates in the region and opens it up to hefty penalties for noncompliance as the bloc ups the pressure on tech giants to play nice with smaller rivals.

Key Facts

The Commission said both business and end users are “locked-in” to Apple’s iPadOS ecosystem due to its size and user base, which it said the company leverages to disincentivize users from switching to competitors, giving Apple six months to ensure full compliance.

The landmark rules, which came into force on March 7, impose stringent guardrails on platforms designated as such “gatekeepers” from the world’s largest tech companies like Apple, Meta, Amazon, Microsoft, Alphabet and TikTok in an attempt to level the digital playing field and make markets fairer, with breaches potentially invoking fines as high as 10% of global annual turnover.

The decision follows a months-long investigation into whether iPadOS falls under the scope of the regime after the Commission designated three of Apple’s other platforms — the Safari web browser, the iOS operating system and the App Store — gatekeepers in September.

In a statement, Apple said it “will continue to constructively engage with the European Commission” to ensure all its designated services comply with the DMA, adding that its “focus will remain on delivering the very best products and services… while mitigating the new privacy and data security risks the DMA poses for our users.”

Big Number

$38 billion. That’s roughly how big a fine Apple could face under the DMA for noncompliance should the maximum 10% of annual turnover be levied, going by the company’s report from the 2023 financial year. According to that report, Apple raked in $383.3 billion in revenue during 2023.

Tangent

EU Commissioner Thierry Breton said the iPadOS investigation marks the first time the bloc has determined whether a platform can be considered a gatekeeper based on qualitative factors, rather than a for simply breaching a numerical threshold for users. “We continue monitoring market developments and will not hesitate to open new investigations should other services below the thresholds present characteristics to be considered important gateways for business users,” he said.

What To Watch For

The Commission said it is investigating whether other platforms fall under the purview of the DMA. It named Elon Musk’s X, ByteDance and Booking as platforms it is currently looking into. A decision will be made by May 13 “at the latest,” the Commission said.

Crucial Quote

“Our market investigation showed that despite not meeting the thresholds, iPadOS constitutes an important gateway on which many companies rely to reach their customers,” said European Commission executive vice-president and competition tsar Margrethe Vestager. “Today’s decision will ensure that fairness and contestability are preserved also on this platform, in addition to the 22 other services we designated last September.”

Further Reading

ForbesApple And Fortnite Maker Epic Games Are Heading Back To Court Again – Here’s Why
The VergeThe EU’s new competition rules are going live – here’s how tech giants are responding

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