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What does a diminished US tech giant look like? European regulators took a step closer to finding out, zeroing in on Apple and what they say are unfair restrictions in its App Store that stifle competition.
The heightened enforcement highlights Apple’s strategic predicament.
In a world saturated by high-end hardware — where customers are increasingly reluctant to surrender to endless smartphone upgrades — Apple’s services business has become more important to the company. But by leaning more heavily into App Store commissions and subscriptions, Apple draws more scrutiny to its “walled garden” business approach.
In preliminary findings, regulators in Brussels contended that Apple violated the Digital Markets Act, a law passed in 2022 designed to address anticompetitive behavior. The EU alleges Apple illegally blocked software developers from telling customers how to access content outside the App Store. The charges are the first to be brought under the European law, giving Apple the unlucky designation of being the first US tech giant to come in its crosshairs.
Apple insists that it is in compliance with the law, pointing to changes it has made in recent months and the ability of developers to steer their users to the web to complete purchases. The company will have a chance to formally respond, and the EU will come to a final decision early next year. European regulators are also probing the business practices of Meta and Google to verify their compliance with the law.
Apple’s charges in Europe come as legal troubles ratchet up at home. Apple faces antitrust charges from the US Justice Department and 16 state attorneys general who have alleged that the iPhone maker wielded illegal monopoly tactics in the smartphone market.
From Wall Street’s point of view, the multiheaded threat seems far off. Apple has only just arrived to the AI party, and its bullish analysts see AI monetization as the next lucrative frontier.
The ultimate cost of regulatory compliance might mean a splintered tech landscape with more restrictive rules for some markets. But the Apple ecosystem remains unrivaled.
And if AI-focused apps fall into place like the prior generation’s, even a more competition-friendly form of gatekeeping will be enough to keep Apple on top.
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