EU classifies iPadOS as a ‘gatekeeper’ subject to DMA rules

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The European Commission has classified Apple’s iPadOS as a “gatekeeper” under the EU’s new tech competition rules, subjecting it to strict requirements aimed at promoting fairness and expanding consumer choice.

“The Digital Markets Act is a dynamic tool which allows us to tackle the realities of digital markets,” said Margrethe Vestager, the EU’s competition chief

In a press release on Monday, the Commission stated that its investigation found Apple “presents the features of a gatekeeper in relation to iPadOS” for several key reasons:

  • Apple’s business user numbers for iPadOS exceeded the quantitative gatekeeper threshold elevenfold, while its end user numbers were close to the threshold and predicted to rise further.
  • End users are locked into iPadOS, as Apple leverages its large ecosystem to disincentivise switching to other tablet operating systems. 
  • Business users are locked into iPadOS due to its large, commercially attractive user base and importance for use cases like gaming apps.

“Today, we have brought Apple’s iPadOS within the scope of the DMA obligations. Our investigation showed that despite not meeting the thresholds, iPadOS constitutes an important gateway on which many companies rely to reach their customers,” explained Vestager.

The Commission has given Apple a six-month deadline to make iPadOS compliant with the obligations set by the Digital Markets Act (DMA), suggesting enforced changes like alternative app stores, web app distribution, and alternative browsers could be coming to the iPad’s operating system.

Last September, the EU had already designated Apple as a gatekeeper for iOS, its Safari web browser, and the App Store. It opened a market investigation at that time to assess whether iPadOS should also be designated a gatekeeper platform.

To be classified as a gatekeeper under the DMA, a company must have annual EU revenues above €7.5 billion or a market capitalisation exceeding €75 billion, along with more than 45 million monthly active users and over 10,000 yearly business users in the EU.

Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft were all designated as gatekeepers last year. They had to fully comply with the DMA’s obligations by March 7th.

The DMA imposes a series of operational requirements and prohibitions on designated gatekeepers, including:

  • Allowing third-party app stores and sideloading of apps
  • Allowing developers to promote alternative payment systems 
  • Providing effective interoperability with rival messaging and video call services
  • Not giving preferential treatment to a gatekeeper’s own services
  • Not tying different services together in anti-competitive bundles

Companies that violate the DMA face EU antitrust investigations, substantial fines of up to 10% of their global revenue for initial violations and 20% for repeat offences, as well as potential “behavioural or structural remedies” imposed by Brussels.

The expansion of the gatekeeper designation to iPadOS significantly increases the regulatory pressure on Apple to open up more parts of its ecosystem on tablets. While iOS on iPhones is Apple’s largest software platform, the inclusion of iPadOS brings millions more users and a rapidly growing app ecosystem under the DMA’s scope.

Apple and other tech giants have pushed back against the DMA rules, arguing they will create insecurity and hurt innovation. But the Commission maintains the ex-ante regulations are needed to prevent further market distortions by digital gatekeepers.

Thierry Breton, Commissioner for Internal Market, said: “Today we conclude the first market investigation for qualitative designation under the DMA finding that also iPadOS is an important gateway for businesses to reach consumers.

“Apple now has six months to comply with the DMA obligations. We continue monitoring market developments and will not hesitate to open new investigations should other services below the thresholds present characteristics to be considered important gateways for business users.”

(Photo by Engin Akyurt)

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