Apple is forced, in a sense, to weaken the symbolic fortress of the iPhone in Europe against the background of stricter regulatory requirements in this region.
The EU is currently striving to provide local consumers with more choices. However, as part of the relevant efforts, if too radical decisions are made, there may be a risk that hackers will get additional loopholes to access the personal and financial information of citizens stored on devices.
On Thursday, March 7, the technology giant based in Cupertino, California, launched the overhaul in the EU, which provides for the largest changes to the iPhone App Store since the presentation of the corresponding concept in 2008. In this case, the main innovation is that European users get the opportunity to download apps for smartphones of the company from digital platforms that do not belong to Apple. Moreover, in this case, consumers are given access to alternative payment methods for online transactions.
European regulators hope that the changes mandated by the Digital Markets Act, or DMA, will weaken monopolistic control over digital products and services, which is currently a kind of Big Tech dominance point. In this case, it means various kinds of virtual solutions and developments used by consumers and businesses. In the context of countering the dominance of Big Tech, European regulators are based on the consideration that digital products and services are increasingly integrated into the process of human livelihood in all its aspects, including in the everyday dimension of being.
The new regulatory measures in the EU come into force a few days after Apple was fined almost $2 billion (1.8 billion euros) in this region for violating competition rules in the music streaming market. The technology giant has negatively perceived the new European standards of activity concerning Big Tech. The company claims that the changed regulatory system creates unnecessary risks from the point of view of the safety of iPhone owners in the EU.
The tech giant said the new rules form a space of enhanced opportunities for scammers and other malicious attacks launched from apps and uploaded outside Apple’s digital ecosystem. The company also warns about the risks of intensifying of the activity virtual services that sell illegal content and drugs. The tech giant has long banned storing such materials in its apps.
Apple is committed to maintaining security guarantees and adhering to new EU regulations. At the same time, the tech giant warns that the changes envisaged by the DMA will inevitably cause a kind of gap between the protection measures that European users of the company’s devices can rely on and consumers of the brand’s products living outside this region. Such a situation will form over time.
At the same time, some technology companies, including music streaming service Spotify and video game maker Epic Games, negatively assess the DMA compliance practices used by Apple. According to the specified firms, the iPhone developer in this case adheres to a formal approach that does not involve significant efforts to meet the requirements.
Spotify, Epic, and more than two dozen other companies and alliances in a March 1 letter to the European Commission, the EU executive arm overseeing the DMA, said that the tech giant does not create conditions for fair competition and does not expand the possibilities of choice, instead acting towards the formation of new barriers and strengthening its own position in the iPhone ecosystem.
Epic, which developed the popular video game Fortnite, also rebuked Apple for refusing to launch an alternative digital products store for its smartphones in Sweden. At the same time, the technology giant officially announced the relevant plans. In this case, Epic’s position is that Apple is blatantly violating the DMA by its refusal to create an alternative app store. The video game maker also claimed that the tech giant deliberately thwarted its attempt to compete as part of a backlash for harsh criticism posted by Epic CEO Tim Sweeney, who spearheaded a largely unsuccessful antitrust case against the iPhone App Store in the United States.
Other tech giants are also forced to respond to the digital European landscape, which is currently in the process of transformation in the context of changes in the legal component of the structure. Google and Facebook are beginning to adjust the corporate norms of their activities in the EU against the background of an updated regulatory system. In the case of Apple, the new rules largely contradict the company’s philosophy. The ideology of the corporate policy of the technology giant at a fundamental level provides for strict control over every aspect of the functioning and use of products.
Apple adheres to the so-called walled garden approach, the concept of which was coined by the company’s co-founder Steve Jobs, who died in 2011. As part of this strategy, careful design of the hardware powering the devices is envisaged. Also, the approach formulated by Steve Jobs, as one of the main requirements determines the control of commerce which is carried out in the process of functioning of the company’s products.
The mentioned concept allowed the technology giant to gradually transform into a powerful business structure with an annual revenue of almost $400 billion. The company believes that a significant financial result is associated with a high level of trust on the part of users. The tech giant is convinced that the system of trusting relationships between the manufacturer and consumers in this case was formed based on long-term experience of vigilant management of the iPhone and other popular products such as iPad, Mac, and Apple Watch.
Tim Sweeney of Epic, despite negative criticism of Apple and claims about restrictions on his company’s ability to compete, was forced to admit that he is a user of the Cupertino-based brand devices, noting that this choice is due to strict security measures. The mentioned measures are applied by the technology giant as part of countering hackers and ensuring a high level of protection of customer privacy.
Tim Sweeney acknowledged the effectiveness of Apple’s security strategy during testimony at the trial in May 2021. US judge ruled that the App Store is not a monopoly, but at the same time demanded that the tech giant start allowing links to third-party payment methods inside iPhone apps in the United States. The company started fulfilling this requirement in 2024. The tech giant has introduced a new practice after the US Supreme Court refused to hear an appeal over the obligation to link third-party payment methods.
At the same time, Apple continues to ban alternative digital iPhone app stores in the United States and more than 100 other countries outside the EU.
Apparently, European regulators are convinced that the benefits that users will receive after increased competition significantly exceed the security risks and are a factor that neutralizes potential threats to the protection of personal data. It is worth noting that this position if it is really inherent in the EU authorities, is to a certain extent conditional. In this case, different aspects of the existence of the digital environment are compared. In fact, a situation is being formed in which the development of one process provokes risks for some dimension of the system’s existence. At the same time, so far any reasoning on the potential consequences of the EU’s decision to weaken monopoly control in the digital environment is only an assumption that has no confirmation based on practical experience.
At the same time, changes in the European regulatory system are also probably to have positive results. For example, the cost of making transactions within apps is likely to decrease. Competing digital platforms are likely to charge lower fees than Apple, whose commercial practice provides for a range of the mentioned figures varying from 15% to 30%. The tech giant has been following this financial policy for many years.
There is an opinion in the expert community that additional opportunities for online transactions in the EU will not affect Apple’s approach to charging fees. Proponents of this point of view are convinced that the stance of the technology giant will not be adjusted after the appearance of relatively low thresholds. At the same time, the mentioned opinion contains statements that new regulatory requirements in the EU, in addition to expanding the choice for users, also form certain barriers to the promotion of alternative proposals.
Apple said that the security problems provoked by the DMA are so significant that government agencies, including those related to the defense sector, banking, and emergency services, want to make sure that it is possible to quickly block employees who own iPhones from accessing apps distributed outside the above-mentioned fenced garden of the tech giant. The company claims that downloading apps that are not part of the line of digital products offered in the App Store creates security threats and puts government data and devices at risk.
As we have reported earlier, Sales of Apple’s Smartphones Fall in China.
