On Monday, the European Commission declared that iPadOS, Apple’s operating system for iPad, has been recognized as a key digital gatekeeper according to the EU’s latest tech regulations. These fresh guidelines impose rigorous standards aimed at fostering fair competition in business and enhancing consumer choices.
During September 2023, the European Commission designated Apple’s iOS, Safari web browser, and App Store as gatekeepers. Concurrently, they commenced a market inquiry to evaluate if iPadOS similarly functions as a crucial entry point for business users to connect with end users.
The investigation has concluded, with the Commission asserting that Apple “exhibits characteristics of a gatekeeper concerning iPadOS,” as stated in a press release by the EC on Monday. This declaration is based on the following grounds:
- Apple’s business user count surpassed the quantitative threshold by eleven times, with its end-user figures nearing the threshold and expected to increase soon.
- iPadOS creates a lock-in effect for end users, utilizing Apple’s extensive ecosystem to discourage them from migrating to alternative tablet operating systems.
- Business users are committed to iPadOS due to its extensive and commercially appealing user base, as well as its crucial role in specific scenarios like gaming apps.
Apple now faces a six-month deadline to implement required adjustments to iPadOS to ensure full compliance with the Digital Markets Act (DMA). This echoes a similar process Apple underwent with iOS. Recent months have seen Apple implementing substantial changes in iOS and App Store policies, all in response to DMA guidelines.
Therefore, it’s plausible to anticipate forthcoming updates to iPadOS introducing DMA-inspired changes, such as support for third-party app stores, the option to uninstall Safari completely, and other significant alterations previously seen in iOS.
Therefore, to be designated as a “gatekeeper” under the Digital Markets Act, certain criteria must be met. This includes achieving sales of at least €7.5 billion across the EU or having a market capitalization of €75 billion or higher. Additionally, services or platforms must have a monthly active user base exceeding 45 million and attract over 10,000 active business users annually within the European Union.
Our market investigation showed that despite not meeting the thresholds, iPadOS constitutes an important gateway on which many companies rely to reach their customers. Today’s decision will ensure that fairness and contestability are preserved also on this platform, in addition to the 22 other services we designated last September. Apple has six months to make iPadOS compliant with the DMA.” – Margrethe Vestager, Executive Vice-President in charge of competition policy
It’s important to note that Apple, Alphabet, Amazon, ByteDance, Microsoft, and Meta were all identified as gatekeepers by the Commission. Like Apple, these global companies were required to comply with all DMA obligations by March 7th.
Apple has the option to opt out of complying with the new regulations. However, this decision would come with substantial consequences, including significant compensations for breaches of the Digital Markets Act (DMA). These consequences may involve regular EU investigations, imposing substantial fines, and implementing “behavioral or structural remedies.”
The compensation amount can be substantial, reaching up to 10 percent of a company’s global revenue. For repeated violations, the fine can escalate to as much as 20 percent. Given Apple’s substantial annual turnover, this could amount to tens of billions of dollars.
It appears that Apple finds itself in a bind with the European Union, necessitating all the necessary adjustments to remain compliant. In the upcoming months, significant changes may be on the horizon for iPad’s operating system too. We’ll continue to provide updates as Apple reveals more details.
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