Apple under investigation by the Competition and Market Authority

Apple Inc (NASDAQ:AAPL) is under investigation by the UK’s Competition and Market Authority (CMA) over the way it operates its App Store. The investigation was launched following complaints that its terms and conditions for app developers are unfair and anti-competitive. Unlike Microsoft, Apple has long operated a “walled garden” model in which it seeks to control and profit from what is allowed on its platform. In terms of software applications (apps) on its mobile phone operating system, Apple exerts control by vetting apps on its App Store, with developers expected to agree to certain terms if they want their app to be listed in the store. The CMA said the complaints from developers focus on the terms that mean they can only distribute their apps to iPhones and iPads via the App Store. These complaints also highlight that certain developers who offer ‘in-app’ features, add-ons or upgrades are required to use Apple’s payment system, rather than an alternative system. Apple charges a commission of up to 30% to developers on the value of these transactions or any time a consumer buys their app. The CMA said its investigation will consider whether Apple has a dominant position in connection with the distribution of apps on Apple devices in the UK and, if so, whether Apple imposes unfair or anti-competitive terms on developers using the App Store. “Millions of us use apps every day to check the weather, play a game or order a takeaway. So, complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice – potentially causing customers to lose out when buying and using apps – warrant careful scrutiny,” said Andrea Coscelli, the chief executive of the CMA said. “Our ongoing examination into digital markets has already uncovered some worrying trends. We know that businesses, as well as consumers, may suffer real harm if anti-competitive practices by big tech go unchecked. That’s why we’re pressing on with setting up the new Digital Markets Unit and launching new investigations wherever we have grounds to do so,” Coscelli added.