Proceeding against Apple based on new rules for large digital companies (Section 19a(1) GWB) – Bundeskartellamt examines Apple’s significance for competition across markets

The Bundeskartellamt has today initiated a proceeding against the technology company Apple based on the new competition law rules for large digital companies. This is the fourth large digital company against which the authority is taking action based on this new competition law tool. In the past months, the Bundeskartellamt has already initiated similar investigations against Facebook (see press release of 28 January 2021), Amazon (see press release of 18 May 2021) and Google (see press release of 25 May 2021).

In January 2021, the 10th amendment to the German Competition Act (GWB Digitalisation Act) came into force. A key new provision (Section 19a GWB) enables the authority to intervene earlier and more effectively, in particular against the practices of large digital companies. In a two-step procedure the Bundeskartellamt can prohibit companies which are of paramount significance for competition across markets from engaging in anti-competitive practices.

Today the Bundeskartellamt has initiated the first step against Apple in a proceeding to determine whether the company is of paramount significance across markets. An ecosystem which extends across various markets may be an indication that a company holds such a position. It is often very difficult for other companies to challenge such a position of power.

Andreas Mundt, President of the Bundeskartellamt: “We will now examine whether with its proprietary operating system iOS, Apple has created a digital ecosystem around its iPhone that extends across several markets. Apple produces tablets, computers and wearables and provides a host of device-related services. In addition to manufacturing various hardware products, the tech company also offers the App Store, iCloud, AppleCare, Apple Music, Apple Arcade, Apple TV+ as well as other services as part of its services business. Besides assessing the company’s position in these areas, we will, among other aspects, examine its extensive integration across several market levels, the magnitude of its technological and financial resources and its access to data. A main focus of the investigations will be on the operation of the App Store as it enables Apple in many ways to influence the business activities of third parties.”

Based on this first proceeding, the Bundeskartellamt intends to assess in more detail specific practices of Apple in a possible further proceeding. In this regard, the authority has received various complaints relating to potentially anti-competitive practices. These include, among others, an association complaint from the advertising and media industry against Apple restricting user tracking with the introduction of its iOS 14.5 operating system, and a complaint against the exclusive pre-installation of the company’s own applications as a possible type of self-preferencing prohibited under Section 19a GWB. App developers also criticise the mandatory use of Apple’s own in-app purchase system (IAP) and the 30 percent commission rate associated with this. In this context, the marketing restrictions for app developers in Apple’s App Store are also addressed. The latter complaint has much in common with the European Commission’s ongoing proceeding against Apple for imposing restrictions on the streaming service Spotify and accordingly preferencing its own services. Where necessary, the Bundeskartellamt will establish contact with the European Commission and other competition authorities in this regard. So far, no decision on initiating a further proceeding has been taken.