New EU Regulations Could Limit Apple's Control Of The App Store

The European Commission announced Wednesday it is proposing a law governing unfair trading practices by online platforms, such as Google and Apple. The proposal could limit Apple’s control over its App Store.

The European Commission said in its midterm review of its digital strategy that the EU needs to take action to “promote the online platforms as responsible players of a fair internet ecosystem.”

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The commission said it will prepare an initiative to tackle “unfair contractual clauses and trading practices identified in platform-to-business relationships” by the end of the year.

The move comes after chief executives from European firms, including Spotify, Deezer and Rocket Internet, sent a letter to the EU, accusing mobile giants, like Google and Apple, of abusing their power within the smartphone market. Apple’s iOS and Google Android hold more than 90 percent of the global smartphone market, IDC numbers show.

The companies did not mention Google and Apple by name in their letter, but they specifically highlighted mobile operating ecosystems, app stores and search engines. The letter claimed the companies exhibited anti-competitive behaviors. The letter also criticized companies with online platforms that allow them to become “gatekeepers.”

“Our collective experience is that where online platforms have a strong incentive to turn into gatekeepers because of their dual role, instead of maximizing consumer welfare, they can and do abuse their privileged position and adopt B2B [business-to-business] practices with adverse consequences for innovation and competition,” the letter said. “These practices range from restricting access to data or interaction with consumers, biased ranking and search results to lack of clarity, imbalanced terms and conditions and preference of their own vertically integrated services.”

The EU said Wednesday its investigation, which began a year ago, found some online platforms were conducting trading practices that are a “potential detriment [to] their professional users.” The commission found platforms were delisting products or services without due notice or without any possibility to contest the move. The EU said the platform’s actions contribute to lack of transparency.

“There is widespread concern that some platforms may favor their own products or services, otherwise discriminate between different suppliers and sellers and restrict access to, and the use of, personal and nonpersonal data, including that which is directly generated by a company's activities on the platforms,” the commission said.

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This isn’t the first time Apple has faced trouble over its App Store. Earlier this year, a California judge ruled iPhone app buyers may sue Apple over claims the company monopolized the market for iPhone apps by not letting people buy them outside the App Store. The decision brought back a 2013 ruling that dismissed a lawsuit by a group of iPhone users who claimed Apple’s App Store control led to anti-competitiveness and therefore higher prices on products.