EU antitrust officials on Monday identified iPadOS, Apple's operating system for iPads, as a significant digital gatekeeper under the EU's new tech regulations, which carry strict requirements that aim to promote fair competition and expand options for consumers.
Last September, the Commission designated Apple as a gatekeeper for its iOS iPhone operating system, its web browser Safari, and its App Store. On the same day, the Commission opened a market investigation to assess whether iPadOS constitutes an important gateway for business users to reach end users in order to assess whether should be designated as a gatekeeper.
That investigation has now ended. According to an EC press release shared on Monday, 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.
The Commission has now given Apple a six-month deadline to fully comply with the obligations set by the Digital Markets Act (DMA), which means we should expect enforced changes in iOS like alternative app marketplaces, web distribution, and alternative browsers to come to iPadOS as well in a forthcoming update.
"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."
To be classified as a "gatekeeper" under the DMA, a company must fulfill certain criteria, including having sales across the EU of at least €7.5 billion, or a market capitalization of €75 billion or above. The designation also requires platforms or services to have more than 45 million monthly active users and over 10,000 active business users annually within the EU.
Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft were all designated gatekeepers by the Commission, and had to fully comply with all DMA obligations by March 7.
Companies that do not adhere to the new regulations risk facing EU investigations, substantial fines, and the imposition of "behavioral or structural remedies." The fines can amount to 10 percent of a company's global revenue, with a 20 percent penalty for repeat violations.
