Apple Loses Appeal Against German Regulatory Controls

Apple on Tuesday lost its appeal in Germany's Federal Court of Justice against a regulatory assessment that subjects the company to heightened antitrust scrutiny in the country (via Reuters).

The German court ruled that the Federal Cartel Office (FCO) was correct in its April 2023 decision to classify Apple under the "extended abuse control" regime of the country's Competition Act. The designation gives German authorities expanded powers to intervene against potential anti-competitive practices by Apple.

The judges affirmed that Apple's economic position across markets meets the threshold for increased oversight, citing the company's extensive financial resources and vertically integrated ecosystem. "The products and services that Apple offers are highly vertically integrated, closely interconnected and largely reserved for users of Apple devices," the court stated. "This is the basis for what the company itself calls the Apple ecosystem."

German regulators had argued that Apple's two billion device active install base gives it a "strong power" to create rules for third parties, and allows Apple to exert control over customers and access to those customers.

Apple contested the decision and claimed that the FCO misrepresented the competitive landscape it faces in Germany. In a statement, Apple said the ruling "discounts the value of a business model that puts user privacy and security at its core."

The extended abuse control designation remains valid for five years and joins Apple with other tech giants including Google, Meta, and Amazon that are already subject to special controls in Germany.

The FCO is currently investigating Apple's App Tracking Transparency framework, which requires apps to get explicit user consent before tracking them. Regulators are examining whether this privacy feature acts as a form of self-preferencing by Apple.

FCO president Andreas Mundt welcomed the ruling: "This means that the highest court has confirmed that Apple is subject to stricter abuse control," he said. "Our ongoing review of Apple's tracking regulation for third-party apps is therefore on a solid footing."

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