Apple is everywhere. Its flagship iPhones make up half of all mobile phones in Britain – a level of market dominance unimaginable to those of us who remember playing Snake on a Nokia 3310.
There are many hardcore Apple fans for whom this won’t be a problem. And it’s certainly not a problem for Tim Cook, the company’s CEO, who was spotted swigging drinks and cracking okes with Lizzo, Henry Cavill and other celebrity friends at last month’s Superbowl.
Apple was, of course, sponsoring the much-coveted halftime show at America’s biggest sporting event. But Cook wasn’t always part of the cool crowd – and Apple wasn’t always a $2.5 trillion corporate colossus. Once, it was the phone industry’s scrappy upstart, challenging Nokia and other sleepy incumbents.
So where are the scrappy upstarts now? Have Apple and its fellow tech giants devised ways to strangle them at birth? Those are the questions that increasingly bother tech experts and consumer advocates.
They are pinning their hopes on an important new set of rules that have just come into force: the Digital Markets Act that will apply to countries in the European Union. This bold piece of legislation aims to make sure that big tech companies, dubbed gatekeepers for their control of large parts of the internet, don’t misuse their power.
A UK equivalent, the Digital Markets Bill, is making its way through Parliament right now.
The new rules are designed to prevent Apple, Google, Amazon and other tech giants from favouring their own products over others on their platforms. They also tell the biggest firms not to lock users into using only their apps or services.
The aim is to level the playing field, allowing smaller businesses to compete and tomorrow’s superstar tech companies to succeed, ultimately offering consumers greater choice.
Apple’s all-conquering App Store is perhaps the new Act’s juiciest target. The App Store is currently a “walled garden”, meaning that iPhone users have no means to get their apps from anywhere else, and app developers depend on Apple to get their wares to customers.
This market stranglehold enables Apple to impose surcharges on app and in-app purchases of up to 30%, paid by consumers like you and me. This generates tens of billions of revenues for the company annually, at what is thought to be a relatively minimal cost for itself.
The company has started to reveal how it plans to change its ways to bring itself in line with the new European and British laws. The early signs do not look good for the consumer.
Apple says it will slash its surcharge on app purchases from 30% to between 10 and 17%.
But it has also introduced a new “core technology fee” of 50 cents per download for the popular apps. There are numerous other sleights of hand aimed at finding other ways to preserve the massive revenues it generates from its monopoly position.
How much of this Apple gets away with really depends on European and British
policymakers, and whether they are willing to enforce their interpretation of the new legislation via a series of hard-fought inquires and fines over the years to come.
Brussels, at least, is willing to bare its teeth. Earlier this week, the European Commission hit Apple with a €1.8 billion fine – 0.5% of its global sales – for breaching competition rules in relation to music streaming services on its App Store. This was a warning shot.
Increasingly, though, it seems that consumers seeking genuine redress may also need to take matters into their own hands. I am leading a legal action brought in the UK’s Competition Appeal Tribunal on behalf of millions of British iPhone owners, seeking to make Apple accountable for its longstanding 30% charge on apps and in-app purchases.
We argue that this charge is unjustifiable, breaches competition law and only exists because Apple used its monopoly position to shut out competitors.
Our trial is scheduled to begin in London in January next year, and is regarded as a test case in making Big Tech accountable for legal breaches. Its aim is not simply to force Apple to alter its practices, but also to compensate customers for historic overcharging.
Don’t expect Tim Cook to be in smiling attendance when the curtain goes up on that legal showdown. But for Apple, the stakes in London will be much higher than they were at the Superbowl.
Dr Rachael Kent is a lecturer at King’s College London and host of the Digital Health Diagnosed podcast.
