Apple attacks EU crackdown in digital law’s biggest court test

Apple has locked in more than a third of European smartphone users, EU Commission claims

EU commission lawyer Paul-John Loewenthal hit back against the tech giant’s claims, saying Apple’s “absolute control” over the iPhone has allowed it to generate “supernormal profits in complementary markets where its competitors are handicapped and cannot compete with it on an equal footing.”

Apple lashed out at the European Union’s attempts to tame the power of Silicon Valley in the most far-reaching legal challenge of the bloc’s Big Tech antitrust rules.

The iPhone maker’s lawyer Daniel Beard told the General Court in Luxembourg on Tuesday that the Digital Markets Act “imposes hugely onerous and intrusive burdens” at odds with Apple’s rights in the EU marketplace.

The DMA came onto the EU’s books in 2023 and is designed to clip the wings of the world’s largest technology platforms with a slew of dos and don’ts. But over recent months, the law has also drawn the ire of US President Donald Trump and plagued EU-US trade talks.

Apple — seen as the biggest renegade against the EU’s crackdown — challenged the law on three fronts: EU obligations to make rival hardware work with its iPhone, the regulator’s decision to drag the hugely profitable App Store under the rules, and a decision to probe whether iMessage should have faced the rules, which it later escaped.

EU commission lawyer Paul-John Loewenthal hit back against the tech giant’s claims, saying Apple’s “absolute control” over the iPhone has allowed it to generate “supernormal profits in complementary markets where its competitors are handicapped and cannot compete with it on an equal footing.” “Only Apple has the keys to that walled garden,” Loewenthal told the court. “It decides who gets it and who can offer their products and services to iPhone users.” “And through such control, Apple has locked in more than a third of European smartphone users,” he added.

Apple’s broad challenge against the law firstly claims interoperability obligations that force its iPhone services to work seamlessly with rivals’ hardware — such as earbuds or smartwatches — potentially imperil user privacy, security and intellectual property rights.

Secondly, Apple claims that its App Store should escape the rules because the platform does not constitute a singular service under the definition of the law. Under the DMA, Apple’s App Store later came in for a €500m fine for alleged violations — a fine which it is challenging separately.

Thirdly, the tech giant challenges an attempt by the EU to investigate whether its iMessage should have been investigated under the rules, as it isn’t a service that directly generates revenue for the company.

The DMA imposes obligations “that ignore the protection of property rights and issues of privacy and security, which are vital to EU citizens,” Beard said.

Alongside Apple, Alphabet Inc.’s Google, Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., ByteDance Ltd. and Booking Holdings Inc. have also found their services hit.

Apple’s case is the most hard-hitting attack on the law, following on from an earlier defeat for ByteDance over its TikTok platform’s inclusion in the DMA’s scope.

In April, Apple was fined after regulators said it ran afoul of rules related to allowing developers to steer users to make purchases outside of its store. This followed a €1.8bn penalty under traditional antitrust rules similar failings on the app store, but specifically directed at music streaming apps.

Over recent years, the EU has issued costly penalties against Big Tech, including more than €9.5bn in fines against Alphabet’s Google and a separate order for Apple to pay Ireland back taxes of €13bn.

Bloomberg