EU antitrust officials on Monday identified Apple’s iPad operating system iPadOS, as a significant digital gatekeeper under the EU’s new tech regulations, which the EU says is aimed to promote fair competition and expand options for consumers.
The European Commission in September designated Apple as a gatekeeper for its iPhone operating system, iOS, its Safari web browser, and its App Store. That same day, the EC opened an investigation into iPadOS to asses whether the operating system constitutes an important gateway for business users to reach end users in order to assess whether should be designated as a gatekeeper.
The EC has announced that the investigation has now ended, and the Commission’s investigation found that Apple “presents the features of a gatekeeper in relation to iPadOS,” for the following reasons:
- Apple’s business user numbers exceeded the quantitative threshold elevenfold, while its end user numbers were close to the threshold and are predicted to rise in the near future.
- End users are locked-in to iPadOS. Apple leverages its large ecosystem to disincentivise end users from switching to other operating systems for tablets.
- Business users are locked-in to iPadOS because of its large and commercially attractive user base, and its importance for certain use cases, such as gaming apps.
Apple is now faced with a six-month deadline to fully comply with the obligations set by the Digital Markets Act (DMA). This means Apple will likely make changes in iPadOS as it did in iOS, including alternative app marketplaces, web distribution, and alternative browsers .
“The Digital Markets Act is a dynamic tool which allows us to tackle the realities of digital markets,” said Margrethe Vestager, Executive Vice-President in charge of competition policy. “Today, we have brought Apple’s iPadOS within the scope of the DMA obligations. Our market investigation showed that despite not meeting the thresholds, iPadOS constitutes an important gateway on which many companies rely to reach their customers. Today’s decision will ensure that fairness and contestability are preserved also on this platform, in addition to the 22 other services we designated last September. Apple has six months to make iPadOS compliant with the DMA.”
Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft were all designated gatekeepers by the European Commission and were required to fully comply with all DMA obligations by March 7.
To be classified as a “gatekeeper” under the EU’s DMA, a company must have sales across the EU of at least €7.5 billion or a market capitalization of €75 billion or above. Platforms or services must have more than 45 million monthly active users and over 10,000 active business users annually within the European Union.
Companies that do not adhere to the new regulations risk investigations, substantial fines, and the imposition of “behavioral or structural remedies.” Fines can amount to as much as 10% of a company’s global revenue, with a 20% penalty for repeat violations.