As predicted earlier this month, Apple has become the first firm to face preliminary charges under the European Union’s new Digital Markets Act, a blockbuster package of antitrust rules for Big Tech.
Interestingly, this isn’t about the contentious “core technology fee” that companies like Microsoft and Meta say Apple is using to stymie the development of third-party app stores on iOS. The DMA forces Apple to allow such app stores on its mobile platform, but developers taking this option must pay Apple a $0.54 fee for every first installation of their apps.
The Commission did say today that it was now formally investigating the core technology fee—so that could result in further charges down the line. But its initial charges against Apple are about the inability of developers to freely “steer” users to cheaper offers outside iOS, where Apple can’t claim its usual revenue cut.
According to the Commission, Apple prohibits developers from telling iOS users about cheaper deals off Apple’s platform. Apple lets developers use links to steer users from their iOS apps to external websites, but then it hits the developers with more fees—requiring, for example, a payment for purchases the user makes in the first seven days after clicking through to the developer’s website. The Commission says the level of these fees is unjustified.
Apple now must defend itself, but, if it can’t convince the Commission that its terms are kosher, the company will face a final noncompliance decision by March 25 next year. Apple did not respond to a request for comment about the preliminary charges.
But wait, I hear you say, didn’t the Commission already hit Apple with a $2 billion antitrust fine over its anti-steering restrictions, just a few months ago? Yes it did, but that was under the EU’s older, more general antitrust rules (the tech-specific Digital Markets Act allows fines of up to 10% of global annual revenues) and it was also specific to Apple’s restrictions on music-streaming rivals like Spotify.
As I wrote at the time of that fine, Apple and the Commission are now clearly at war with each other. Today’s European salvo comes just a couple of days after Apple took a shot of its own, declaring on Friday that it won’t roll out its new “Apple Intelligence” AI features in the EU this year, because doing so under the DMA rules could harm users. It’s also holding back from Europe the iPhone Mirroring and SharePlay screen-sharing features (which aid remote tech support) that it recently announced.
“We are concerned that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security,” the company said in a statement.
It’s unclear what the DMA’s interoperability provisions—which focus on messaging—have to do with Apple’s ability to roll out a smarter Siri. Also, as journalist Ian Betteridge pointed out over the weekend, EU countries were already unlikely to get Apple Intelligence this year, as it will only be available in U.S. English at first.
That makes Apple’s AI threat look like an attempt at leverage against the European Commission, but, if so, today’s announcement suggests it didn’t work. And why would it? Apple is counting on its AI features to drive mass upgrades of iPhones later this year, as only the latest iPhones (and last year’s iPhone Pros) will be able to run them. Europe accounts for more than a quarter of Apple’s revenues, so it seems unlikely that the company really intends to shoot itself in the foot by depressing sales there.
In related news, the Wall Street Journal reports that Apple has been talking to Meta about integrating Meta AI into Apple Intelligence. Of course, Meta also isn’t rolling out its AI in Europe, because privacy regulators won’t let it train its models on users’ personal data without their express consent. So if Meta and Apple do strike that deal, that will be a veritable turducken of AI functionality that Europeans won’t be able to access anytime soon.
More news below.
David Meyer
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NEWSWORTHY
X shakeup. X CEO Linda Yaccarino has fired her head of business operations, Joe Benarroch, for infractions such as not telling clients about X’s new adult-content policy (adult content is now explicitly allowed) before it was publicized. Global government affairs chief Nick Pickles will reportedly take over from Benarroch. The Financial Times also reports “growing tensions” between Yaccarino and X owner Elon Musk, with Musk pushing for more revenue and lower expenses.
Nvidia in the Middle East. Nvidia has announced its first big AI-chip deployment in the Middle East—specifically, in the data centers of Qatari telecoms giant Ooredoo. This will be a boon for businesses that want to build generative AI applications in Qatar, Algeria, Tunisia, Oman, Kuwait, and the Maldives, Reuters reports. However, it’s unclear what equipment will be installed, as the U.S. prohibits exports of Nvidia’s top-tier AI chips to the region, owing to fears that Chinese companies may be able to access them there.
Target partners with Shopify. Target will let third-party merchants on Shopify’s e-commerce platform also sell their products on the Target Plus platform, under a new deal between the two companies. Bloomberg reports that the agreement will broaden Target Plus’s assortment and help it better compete with the likes of Walmart and Amazon.
SIGNIFICANT FIGURES
4
—The number of publicly traded auto dealers that have now warned investors of a potential financial hit from the ongoing ransomware attack that has crippled much of the sector in North America.
IN CASE YOU MISSED IT
TikTok owner ByteDance is talking with U.S. tech firm Broadcom about a possible TSMC-made AI processor, by Bloomberg
AI automation in the workplace is about to reach a major tipping point, by Jason Ma
An AI startup that doesn’t have enough cash to settle a privacy lawsuit is giving plaintiffs a share of the company’s value instead, by the Associated Press
Microsoft’s Copilot will let you join 3 meetings at once, but experts say it misses the point: ‘No one has ever wanted to be in a meeting,’ by Sasha Rogelberg
The ‘radical optimism’ philosophy that gave us the Google Glass, by Frederik G. Pferdt (Commentary)
BEFORE YOU GO
Repairable PCs. iFixit, the DIY repair community and vendor of parts, is very impressed with Microsoft’s new Copilot+ PCs—at least, the ones made by Microsoft itself. “The Surface Laptop 7 is an astonishingly repair-friendly device, almost the antithesis of the original Surface Laptop,” enthused iFixit’s lead teardown technician, Shahram Mokhtari, in a blog post. The original Surface scored a 0/10 for repairability—accessing the battery meant whipping out a box cutter—but the new Surface Laptop 7 and Surface Pro 11 each score 8/10, with most components being easily accessible. Mokhtari suggested that Microsoft’s shift is “a sign that Right to Repair advocacy and legislation has begun to bear fruit.”
