On 11 May 2023, the Italian Competition Authority (“Autorità Garante della concorrenza e del mercato” “AGCM”) announced the launch of an investigation into Apple Inc., Apple Distribution International Ltd and Apple Italia S.r.l. (collectively, “Apple”), to ascertain the existence of an alleged abuse of a dominant position in the app market for users of the iOS operating system (the AGCM’s investigation order is available here in Italian language). In particular, the AGCM explained that, since April 2021, Apple, as owner of the iOS operating system, had adopted a privacy policy for third-party app developers, who use its online shop “App Store”, (the so called “App Tracking Transparency Policy” “ATT Policy”) that is more restrictive than Apple's internal policy. In the AGCM's view, the different treatment is mainly based on (i) the characteristics of the banner that appears to users to acquire consent to the tracking of their web browsing data; and (ii) the tools used to measure the effectiveness of the advertising campaigns. Background With regard to the characteristics of the banner used to acquire user’s consent to the tracking of their web browsing data, the AGCM pointed out that a) the third-party app developers banner visually places greater emphasis on the hypothesis of denial of consent by the user; b) it uses the expression “consent to keep track of the activities carried out in other companies apps and sites” without giving any explanation of the term “keeping track” which could easily represent an element of concern and dissuasion for the user; c) it does not highlight what are the benefits for users related to personalised advertising. On the other hand, the banner used for Apple emphasises the positive option of consent and the user gives its consent to “personalised services” and no longer to the “keeping track” of users' browsing activity. Moreover, even in the event that the user gives consent to the tracking, the app developer (other than Apple) may still not share the same data to enable the personalisation and effectiveness measurement of ads on another app. Apple's ATT Policy, in fact, requires so-called “double explicit consent” (double opt-in), which requires the user to provide consent to the tracking for each access to the different apps, even if the apps are interlinked. This mechanism does not apply to apps developed by Apple. The consequence of the above appears to be the significant reduction in the consent rates of users who were shown the third-party app developers banner made available through the App Store. Moreover, third-party developers and advertisers appear to the AGCM to be disadvantaged in terms of the data made available by Apple concerning the effectiveness of advertising campaigns on their applications. The issue would be caused by the technical characteristics of the programming interface third-party developers and advertisers can access, whereas the tool Apple adopts for itself, is allegedly much more effective. Prior to Apple's adoption of the ATT policy, competitors could independently offer a variety of tools to help advertisers measure the advertisers to measure the effectiveness of advertising campaigns. Based on the evidence at AGCM’s disposal, it appeared that, following the adoption of Apple's ATT Policy, the reduction in the profiling capacity of the users increased the average cost per share of the purchase by advertisers of advertising space on the apps of Apple's competitors. At the same time, published industry analyses showed that, following the adoption of the ATT Policy, while costs of purchasing of advertising space of Apple's competitors' apps by advertisers increased and there has been a reduction in the revenues of these entities, the percentage of downloads from the App Store increased and the related advertising revenue recorded a significant growth. Assessment based on the parameters set out in Article 102 TFEU The assessment carried out by the AGCM was, therefore, based on the parameters set out in Article 102 of the Treaty on the Functioning of the European Union (”TFEU”): “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States”. The relevant markets have been identified by the set of activities which, on the one hand, allow Apple to influence the ability to collect data from users using the iOS platform and, on the other hand, use and exploit such data for the purposes of the personalisation of advertising campaigns and the financing of apps by developers. In particular, the relevant markets under the product profile are: 1) the market for platforms for the online distribution of apps for users of the iOS operating system in which Apple's conduct takes place and on which the assessment must therefore the assessment of dominance must be carried out; 2) the market for the development and distribution of apps; 3) the markets for online advertising; 4) the market of the manufacture and sale of high-end mobile devices. The dominant position of Apple appeared unequivocal, also at national level, since Apple is the only party able to provide platform services for the online distribution of apps via the iOS operating system worldwide, also prohibiting developers from distributing apps via alternative online shops for iOS devices. Therefore, Apple's market position as the sole provider of an online shop is the same in all Member States. AGCM pointed out that Apple has also taken advantage of its dominant position in order to adopt discriminatory or self-preferencing policies, reducing entry or preventing competitors from entering the market for app development and distribution and benefiting Apple apps, mobile devices and Apple's iOS operating system. In particular, the ATT Policy, the characteristics of the banner that appears to users to acquire consent to the tracking of their web browsing data and the tools used to measure the effectiveness of the advertising campaigns – even though the AGCM did not express any opinion on the compliance of the systems with regard to the applicable data protection regulations – have reduced the data availability and the possibility of carrying out profiling activities on the users’ data for the third-party app developers. Therefore, such systems have led to a decrease in the attractiveness of the advertising space purchased by advertiser since the possibility of targeting advertising to specific consumers is limited as well as the possibility to measure the effectiveness of advertising campaigns over time. Therefore, AGCM did not attribute significance to the level of privacy chosen by Apple in its digital ecosystem, but rather to the choice to adopt differentiated (and potentially discriminatory) privacy policies between itself and its competitors. On a final note, the AGCM noted to be an effect on trade between Member States, as a result of the conduct described, due to the importance of Apple as the main player in the markets concerned and the supranational dimension of those markets. The conduct described, being capable of significantly hindering the entry and operation of actual and potential competitors, including foreign ones, in the national market, therefore appear likely to distort trade between Member States. Overall, Apple's alleged discriminatory practices, may, in the AGCM's opinion: It shall also be noted how data protection profiles and, in particular, the policies adopted by Apple, were considered relevant in determining a possible abuse of a dominant position since considered, by the AGCM, discriminatory and more restrictive to the disadvantage of third-party app developers. Apple position and the Digital Market Act The investigation opened by the AGCM against Apple concerning a possible abuse of its dominant position (in this case, with reference to the Apple store platform) allows for a brief insight into the new European legal framework following the entry into force of the Digital Market Act (“DMA” or “Regulation”) on 1 November 2022 and the application of its rule starting from 2 May 2023. The purpose of the DMA is to ensure a level playing field for all digital companies, regardless of their size. The Regulation lays down clear rules for big platforms - a list of “dos” and “don’ts” - which aim to stop them from imposing unfair conditions on businesses and consumers. Such practices include ranking services and products offered by the gatekeeper itself higher than similar services or products offered by third parties on the gatekeeper's platform or not giving users the possibility of uninstalling any preinstalled software or app. Moreover, among the “dos”, gatekeepers will have to allow third parties to inter-operate with the gatekeeper’s own services in certain specific situations. Precisely in the light of the new provisions introduced by the DMA, Apple's position on using only the App Store on its devices to download applications (and, therefore, the possibility of introducing controversial and potentially discriminatory policies such as the ATT Policy governing the installation of apps through the platform) could not fulfil the mentioned obligation to ensure the interoperability of the gatekeeper’s services with similar third-party services. The DMA also sets out the criteria for identifying large online platforms as gatekeepers and gives the European Commission the power to carry out market investigations, allowing for updating the obligations for gatekeepers when necessary and sanctioning bad behaviour. The European Commission will designate gatekeepers by 6 September 2023 at the latest and they will then have a maximum of six months to comply with the new obligations under the Digital Markets Act, so by March 2024.
