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Apple fights back as regulatory scrutiny intensifies

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Apple has gone on the defensive about how it runs its App Store, as regulatory scrutiny of the iPhone’s software and services marketplace mounts on both sides of the Atlantic.

Ahead of its annual developer conference in Silicon Valley next week, Apple has set out its “principles and practices” for the App Store, which include having hundreds of staffers review 100,000 apps every week to ensure they meet its “strict guidelines on privacy, design and business models”. 

“We believe competition makes everything better and results in the best apps for our customers,” Apple said in an update to its website on Wednesday. “Our users trust Apple — and that trust is critical to how we operate a fair, competitive store for developer app distribution.”

Apple’s practices and guidelines have come under growing criticism from companies such as Spotify, which has complained to the European Commission about what the music streaming service describes as anti-competitive behaviour

Daniel Ek, Spotify’s chief executive, has alleged that Apple is “acting as both player and referee to deliberately disadvantage other app developers”, by charging a fee of up to 30 per cent on App Store purchases and subscriptions, and limiting Spotify’s access to iPhone features such as its Siri voice assistant and other accessories. 

While Apple has dismissed Spotify’s antitrust complaint as “misleading rhetoric”, the EU is likely to launch a formal antitrust investigation soon, the Financial Times reported this month. 

In the US, Apple is bracing itself for a class-action lawsuit from consumers who allege the App Store’s “walled garden” is anti-competitive. The US Supreme Court ruled this month that app buyers were allowed to sue Apple for alleged overcharging, again related to its 30 per cent commission. 

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Apple has maintained that it is “not a monopoly by any metric” and that the commission covers payment processing, app reviews and other distribution costs that it carries for developers. 

Still, the Supreme Court’s decision follows growing political concerns in Washington over the dominance of big tech companies. 

Elizabeth Warren, the US senator and Democratic presidential hopeful, has argued that Apple should not be allowed to operate the App Store as well as make apps that compete with developers that rely on that marketplace for distribution to its devices. 

“Either they run the platform or they play in the store,” she told tech news site The Verge in March. 

Apple’s website update on Wednesday did not outline any policy changes in response to these challenges, but pointed to examples where independent developers have successfully launched apps that rival those built into the iPhone, including cameras, calendars, maps, cloud storage and messaging as well as music and other media services. 

Key to the legal fallout from this debate will be whether regulators see the iPhone and its App Store as a self-contained market, in which Apple might be deemed a monopolist, or if they consider its position in the broader smartphone market, where the iPhone is only a minority player against the likes of Google, Samsung and Huawei. 

In an attempt to define the “relevant market” for assessing competition, Apple asserted on Wednesday that developers have “lots of choices for distributing their apps”. 

While rival app stores such as Google Play were not accessible to iPhone owners, Apple pointed to “the open internet” as a way for developers such as Netflix to distribute web apps outside its own marketplace. 

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Netflix is a prominent example of a developer that has removed the ability to subscribe to its video streaming service from within the App Store system, to avoid paying Apple’s commission. 

Elsewhere in Wednesday’s 1,500-word missive, Apple noted that 84 per cent of apps were free, meaning their developers “pay nothing” to the company for distribution on its store. 

However, many free apps rely on targeted advertising for income, with some using data collection techniques that have caused alarm among privacy campaigners. A recent study by the Washington Post found that in a single week, more than 5,000 trackers hidden inside iPhone apps were sending personal information to an array of marketers, data brokers and research firms. 

Critics said that amounted to dereliction of duty by the App Store review team for a company whose latest ad campaign promised: “What happens on your iPhone stays on your iPhone.” 

Apple said that privacy concerns were the second most common reason for an app to be rejected during its review process, after “minor bugs”.



Via Financial Times

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