With its decision today, the Federal Court of Justice has confirmed Apple’s cross-market significance for competition. The group, which is the most valuable company in the world with a market value of over 3 trillion US dollars, is now subject to increased supervision by the Federal Cartel Office.
- Apple: Market dominance on several levels
Apple operates as a vertically integrated company with a comprehensive ecosystem of hardware, software and digital services. In particular, the App Store as a central distribution platform for applications and exclusive access to proprietary operating systems such as iOS and iPadOS have put Apple in a dominant position.
In its decision of 3 April 2023 (B 9-67/21), the German Federal Cartel Office therefore found that Apple Inc., including all of its affiliated companies, has a paramount cross-market significance for competition within the meaning of Section 19a (1) ARC. Apple immediately lodged an appeal against this decision, but was ultimately unsuccessful. The Federal Court of Justice sees the importance of the group in particular in the control of multi-sided markets. Through the App Store, which is the only way for third-party providers to distribute apps for iPhones and iPads, Apple controls a critical access channel for software providers and developers.
In 2020 alone, over 30 billion apps were downloaded from the App Store, with a total revenue of more than 640 billion US dollars. Apple’s control over this platform, combined with the close integration of its own services such as Apple Music, Apple Pay and Apple TV, further strengthens the Group’s market position.
For Apple, the determination pursuant to Section 19a (1) ARC not only means official recognition of its enormous market power, but also paves the way for potential regulatory measures that the company can expect in the future.
- Antitrust framework: Section 19a GWB and Digital Markets Act
The Federal Court of Justice’s confirmation of Apple’s cross-market significance is based on the provisions of Section 19a GWB, which was introduced specifically to place large digital groups under increased supervision. Amazon was the first company to be regulated under this provision in 2024.
The determination of overriding cross-market significance for competition does not require a specific threat to or impairment of competition. Rather, the existence of strategic and competitive opportunities, the abstract potential threat of which is addressed by the provision, is sufficient. § Section 19a (1) ARC is intended to enable the Federal Cartel Office to more effectively monitor those large digital companies whose resources and strategic positioning allow them to exert considerable influence on the business activities of third parties, distort the competitive process to their own advantage and transfer their existing market power to ever new markets and sectors.
Just as in its decision on Amazon’s cross-market significance for competition, the Federal Court of Justice once again emphasises that the fact that Apple was designated by the European Commission as a gatekeeper under Art. 3 of the Digital Markets Act (DMA) during the complaint proceedings with its mobile operating systems and app stores and has been subject to its regulations in the European Union since 7 March 2024 does not preclude the finding of Apple’s overriding cross-market significance for competition.
- Outlook: What does this mean for Apple and the competition?
While Apple has already been classified as a gatekeeper under the European Commission’s DMA, today’s judgement shows once again that national competition authorities continue to have their own powers of intervention. In addition to the DMA, the German Federal Cartel Office can also prohibit Apple from engaging in specific behaviour – such as favouring its own products or making interoperability with competing services more difficult.
Determining cross-market significance is only the first step. If the Federal Cartel Office were to find violations of competition law in the future, stricter measures could be threatened. Apple has already had to contend with regulatory pressure in the past, including the DMA requirements to open the App Store to alternative payment systems.
For developers and competitors, this could lead to fairer market conditions and possibly also to more market share in the long term. It remains to be seen to what extent Apple will adjust its business strategy as a result of the stricter monitoring from Germany and Europe. What is clear, however, is that the tech giant from Silicon Valley is increasingly coming under the scrutiny of the antitrust authorities – and this is likely to have a long-term impact on digital competition.