Apple’s war with the EU escalates with new antitrust allegations and an AI threat

Interestingly, this is not about the controversial “core technology fee” that companies like Microsoft and Meta say Apple uses to hamper the development of third-party app stores on iOS. The DMA forces Apple to allow such app stores on its mobile platform, but developers who choose this option must pay Apple a $0.54 fee for each initial installation of their apps.

While the Commission said today that it is now formally investigating the core technology fee – which could lead to further charges in the future – its first charges against Apple relate to the inability of developers to freely “steer” users to cheaper offerings outside of iOS, where Apple cannot claim its usual share of revenue.

According to the Commission, Apple prohibits developers from recommending cheaper offers to iOS users outside the Apple platform. While Apple allows developers to use links to direct users from their iOS apps to external websites, it charges developers additional fees for doing so – for example, a payment for purchases made by the user in the first seven days after clicking through to the developer’s website. The Commission considers the level of these fees to be unjustified.

Apple must now defend itself. However, if it cannot convince the Commission that its terms are kosher, the company will receive a final decision on non-compliance by March 25 next year. Apple did not respond to a request for comment on the preliminary allegations.

But wait, I hear you say, didn’t the Commission just a few months ago fine Apple $2 billion for its anti-steering restrictions? Yes, it did, but that was under the EU’s older, more general antitrust rules (the technology-specific Digital Markets Act allows fines of up to 10% of annual global turnover) and also specifically related to Apple’s restrictions on music streaming competitors like Spotify.

As I wrote at the time of the fine, Apple and the Commission are now clearly at war with each other. Today’s European salvo comes just a few days after Apple launched an attack of its own: on Friday, the company said it would not launch its new AI features, Apple Intelligence, in the EU this year because doing so could harm users under DMA rules. It is also keeping the recently announced iPhone Mirroring and SharePlay Screen Sharing features (which support remote technical support) out of Europe.

“We are concerned that the DMA’s interoperability requirements may force us to compromise the integrity of our products in a way that endangers user privacy and data security,” the company said in a statement.

It is unclear what the DMA’s interoperability provisions – which focus on messaging – have to do with Apple’s ability to introduce a smarter Siri. Moreover, as journalist Ian Betteridge pointed out over the weekend, EU countries were already Apple Intelligence is unlikely to launch this year as it will initially only be available in US English.

That makes Apple’s AI threat seem like an attempt to put pressure on the European Commission. But if that’s the case, then today’s announcement suggests it didn’t work. And why should it? Apple is banking on its AI features to drive mass iPhone upgrades later this year, since only the newest iPhones (and last year’s iPhone Pros) will be able to run them. Europe accounts for more than a quarter of Apple’s revenue, so it seems unlikely the company really intends to shoot itself in the foot by depressing sales there.

In related news, the Wall Street Journal Reports that Apple has spoken to Meta about integrating Meta AI into Apple Intelligence. Of course Meta Also isn’t launching its AI in Europe because data protection authorities won’t allow its models to be trained on users’ personal data without their explicit consent. So if Meta and Apple do make this deal, it’s going to be a real smorgasbord of AI functionality that Europeans won’t have access to any time soon.

More news below.

David Meyer

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WORTH WORRYING

X-restructuring. X CEO Linda Yaccarino has fired her business manager Joe Benarroch for violations such as failing to inform customers of X’s new adult content policy before launch (adult content is now explicitly allowed). Nick Pickles, the company’s head of global government affairs, will reportedly be Benarroch’s successor. Financial Times also reports “growing tensions” between Yaccarino and X owner Elon Musk, with Musk pushing for higher revenues and lower expenses.

Nvidia in the Middle East. Nvidia has announced the first major deployment of AI chips in the Middle East – at the data centers of Qatari telecom giant Ooredoo. That will be a boon for companies looking to develop generative AI applications in Qatar, Algeria, Tunisia, Oman, Kuwait and the Maldives, Reuters reports. It is unclear what equipment will be installed, however, as the US bans the export of Nvidia’s top-of-the-line AI chips to the region, fearing Chinese companies could gain access to them there.

Target works with Shopify. Under a new deal between the two companies, Target will allow third-party sellers on Shopify’s e-commerce platform to also sell their products on the Target Plus platform. Bloomberg reports that the agreement will expand Target Plus’s assortment and help the company better compete with Walmart and Amazon.

IMPORTANT PERSONALITIES

4

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IF YOU MISSED IT

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An AI startup that doesn’t have enough money to settle a privacy lawsuit is giving plaintiffs a share of the company’s value instead, reported the Associated Press

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BEFORE YOU GO

Repairable PCs. iFixit, the DIY repair community and parts supplier, is very impressed with Microsoft’s new Copilot+ PCs – at least the ones made by Microsoft itself. “The Surface Laptop 7 is an amazingly repair-friendly device, almost the opposite of the original Surface Laptop,” iFixit’s lead teardown engineer Shahram Mokhtari raved in a blog post. The original Surface scored 0/10 for repairability — you had to pull out a box cutter to get to the battery — but the new Surface Laptop 7 and Surface Pro 11 each score 8/10, with most components easily accessible. Mokhtari said Microsoft’s change of course is “a sign that right-to-repair efforts and legislation are bearing fruit.”

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