The EU is continuously tightening its regulation of technology giants. According to recent media reports, the European Commission is expected to impose a fine of approximately 500 million euros, equivalent to 3.88 billion yuan, on Apple Inc. in the United States, citing its behavior in obstructing market competition in music streaming services.
The antitrust regulatory agency under the European Commission has stated that Apple has violated EU law by "preventing its competitors from notifying iPhone users that there are cheaper music subscription services outside of the Apple App Store.". The relevant ruling may be announced early next month.
"The EU's antitrust regulation has always been known for its strictness. The 500 million euro fine imposed on Apple this time will once again demonstrate the EU's zero tolerance attitude towards anti competitive behavior by large technology companies." Deng Zhisong, senior partner at Beijing Dacheng Law Firm, told 21st reporter, "In addition, the EU's antitrust investigation cycle is usually long. This investigation began in June 2020 and lasted for nearly four years.". A longer investigation period can provide Apple with ample opportunities to defend itself, and conduct thorough discussions on technical issues such as market definition, evaluation of anti competitive effects, and analysis of legitimate reasons
It is understood that as early as 2019, European streaming giant Spotify officially made relevant allegations, and EU regulators subsequently launched an investigation into this matter. Spotify accused at the time that due to the operation of Apple's App Store, the company was forced to increase the price of subscription services. Although Apple allowed music apps to guide users to register and pay online in early 2022, bypassing the 30% paid commission on the Apple App Store, Spotify's subsequent response stated that the restrictions still exist and that these changes are only for show.
Sources say that EU regulators believe that Apple's move involves abusing its dominant market position and violates EU regulations on strengthening market competition. The EU will accuse the tech giant of abusing its dominant position and engaging in anti competitive business practices against competitors.
It is worth noting that in recent years, the European Union has been actively promoting the implementation of two heavyweight digital regulatory laws for large technology companies. The Digital Services Act (DSA), which comes into full effect on February 17, 2024, aims to strengthen user online security and encourage relevant enterprises to bear legal responsibility for harmful content, false information, advertising tracking behavior, and anti competitive behavior. Violating companies will face fines of up to 6% of global annual revenue.
According to the DSA, the European Commission has designated 17 ultra large online platforms (VLOPs), including Amazon Store, Apple App Store, Alibaba Global AliExpress, and 2 ultra large search engines (VLOSEs), Bing, and Google Search. The monthly active users of these platforms and search engines have reached at least 45 million.
The Digital Market Act (hereinafter referred to as "DMA") will take full effect in March 2024, aiming to standardize large Internet platform companies and ensure a fair competitive environment in the digital field. According to DMA, the European Commission designated six "gatekeeper" enterprises - Alphabet (Google's parent company), Amazon, Apple, ByteDance, Meta and Microsoft for the first time last September, covering 22 core platform services provided by the "gatekeeper", including Google search and browser Chrome, Apple browser Safari, App Store and iOS operating system, ByteDance's TikTok, Facebook And Microsoft operating systems such as Windows, PC, and OS.
DMA has established a series of detailed obligations for gatekeepers, including the obligation not to abuse their advantageous position, data information protection, advertising information disclosure, reporting information processing, and consumer rights protection. If the relevant enterprise violates the corresponding requirements, it will face a fine of up to 10% of its global annual revenue in the previous fiscal year, and repeated violations may result in a fine of up to 20% of its global total revenue.
"The 'gatekeepers', including Apple, need to fully fulfill their obligations under the DMA regulations. It is worth noting whether the EU will issue a penalty decision against Apple before the DMA fully takes effect." Deng Zhisong said.
In order to meet the requirements of DMA, on January 25, 2024, Apple announced adjustments to services such as iOS, Safari, and App Store provided within EU member states, including new options for application distribution and payment processing for developers, as well as adjustments to user disclosure, control, and protection. Simply put, Apple will support "sideloading" in the European Union, allowing users to download apps from channels outside of the App Store. Users can also choose other payment methods and default browsers outside of Safari.
Professor Chen Bing, Director of the Competition Law Center at Nankai University, previously pointed out in an interview with 21 reporters that the legislative purpose of DMA is very clear, which is to establish and maintain a competitive and fair market in the field of digital economy. The EU anti-monopoly law can also regulate the unfair trading behavior of some leading companies in the digital economy field, but these regulations are post hoc. The EU Commission has formulated a DMA to conduct pre supervision on "gatekeepers", which can complement the post supervision of EU anti-monopoly law.
In addition, Wu Shenkuo, doctoral supervisor of the School of Law of Beijing Normal University and deputy director of the Research Center of China Internet Association, believes that it is the core appeal of the EU to strengthen the compliance obligations of the so-called "gatekeepers", promote and promote large platforms to respect and maintain benign digital economy market rules, and leave necessary living space for the development of small and medium-sized enterprises, The purpose is to consolidate and enhance the world position of the European Union in the development of the digital economy, while addressing external competitive pressures.
Multinational digital enterprises should establish an effective compliance management system, proactively identify potential legal risks and respond to them by establishing compliance systems, developing relevant contingency plans, and establishing compliance management agencies. In Deng Zhisong's view, for enterprises, post rectification is at most to make up for the lost sheep before it is too late. The various costs that enterprises will bear will be significantly increased, and the effectiveness of relevant measures will also be difficult to ensure. Effective compliance management in advance is conducive to the prevention and control of legal risks. Even if occasional illegal activities occur, it helps to clarify the legal responsibilities of all parties and handle them quickly according to the plan.
Deng Zhisong also pointed out that the digital market should pay close attention to the laws, regulations, and regulatory dynamics of the place where business operations are located. In the era of digital economy, the ever-changing market conditions have led to more rapid changes in regulatory policies in various jurisdictions compared to the past. Enterprises should not be complacent about passively accepting regulation, but should also actively understand and adapt to it. No matter how complete the compliance system is, it is inevitable that there will be a hundred misunderstandings. Effective grasp of regulatory dynamics can also help enterprises better develop targeted plans, timely apply for exemptions or leniency measures in accordance with the law when facing enforcement actions, and control the illegal impact within an acceptable range as soon as possible to reduce losses.