Changing the Tune of EU Competition Law – The Apple (Music Streaming) Statement of Objections
On 30 April 2020 the European Commission published its Statement of Objections (‘SO’) against Apple, claiming that the tech giant has abused its dominant position in the market for the distribution of music streaming apps through its App Store, in a move which highlights the potential of competition policy to be used as a tool for digital sovereignty and which raises questions about the future of competition law enforcement in the European Union as well as the goals of competition policy in the digital age.
Competition policy has been mooted as a potential tool to address challenges as diverse as climate change, economic recovery from the effects of the COVID-19 pandemic and regulating the behaviour of Big Tech. This expansive interpretation of the potential uses of competition policy has led to the idea of ‘competition overdose’, coined by Ezrachi and Stucke to describe the oversubscription to competition policy as a solution for a wide variety of issues.
The Apple SO can be seen as the newest example of an expansive interpretation of the limits and objective and competition policy, this time in relation to digital sovereignty, a priority of the European Commission and arguably of the European Union as a whole. Although the meaning of ‘digital sovereignty’ is not entirely clear yet, an analysis of the way in which it has been presented by the EU institutions – the Commission, for example, defines it as the ‘capacity to set its own standards rather than follow those of others’ – and defined by scholarship, reveals that this concept revolves around three core elements: autonomy, ability to influence, and the protection of ‘on-line self-determination’ of EU citizens. Moreover, it spans across three dimensions – (1) EU and other states; (2) EU and non-state actors, in particular, Big Tech players and (3) EU citizens and the digital world
These three dimensions are useful in defining the extent of what the Commission means by ‘others’. Considering the second dimension of EU’s digital sovereignty, it can be argued that ‘others’ must be read to also include non-state actors (in addition to states) and in particular Big Tech, which by virtue of their innovation power have also set their own standards, being widely seen nowadays as escaping the limits of current legislation. In the EU, changing the standards set by Big Tech has so far mostly been through competition law enforcement. The two investigations against Google for abuse of its dominant position, currently on appeal before the Court, together with others against Amazon, as well as against Apple, under Article 106 TFEU are all relevant examples. The Digital Services Act Package as a whole is an exercise in digital sovereignty undertaken by the EU in relation to Big Tech and a recognition of the limits of the current legal framework.
The proposal for the Digital Markets Act (‘DMA’) (for an in-depth discussion on the proposal see ‘A New Kid on the Block: How Will Competition Law Get Along With The DMA?’), in particular, signals the beginning of a new era for competition policy in digital markets, providing the Commission with new tools to address issues arising in digital markets (more precisely an ex ante mechanism) and consequently more, and arguably more effective, tools to set its own standards and avoid having to follow those set by others. Despite being a long way from being adopted, the ideas behind the DMA, which seek to reshape the practices and behaviour of gatekeepers on digital markets, already influence and shape the application of competition law – the Apple SO revolving around the provisions in its Article 5 – more specifically 5(b) and 5(c), which impose an obligation on gatekeepers to allow business users to offer the same products or services to end users through third party online intermediation services at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper and promote offers to end users acquired via the core platform service.
Ibáñez Colomo has commented on the Apple SO pointing out two of its main implications. The first one is that the Commission is no longer reluctant to question the business models of the firms under investigations, at least in the digital sphere. The second is a move away from the assessment of anticompetitive effects, again, at least in the digital sphere. Ibáñez Colomo argues that this approach will also be followed in an investigation against another tech giant, Amazon, potentially signalling the start of a new trend. The Apple SO then shows the way in which competition policy is changing in relation to the digital sphere, becoming a tool for digital sovereignty, used, in the words of the European Commission discussed above, as a tool to ‘set its own standards rather than follow those of others’. Not surprisingly then, Ibáñez Colomo observes that the European Commission is testing both the limits of its powers and those of the law. That can be seen as a result of the new objective pursued by the Commission, namely digital sovereignty, an objective which, at least so far (at least until the DMA is adopted), seems hard to reconcile with the current state of EU law.
Nonetheless, how well this decision will hold up in front of the Courts, should it ever get there, is a different discussion altogether. Regardless of what the Court will eventually decide, the approach taken by the Commission of using competition policy as a tool for digital sovereignty will still be effective – at least in the short run, should the Courts decide to put an end to it – in setting EU’s standards forward and advancing the idea of ‘digital strategic autonomy’.
The Apple SO is just one of the most recent manifestations of the process of reshaping competition policy to be not only fit for the digital age, but also fit for digital sovereignty. This process is not popular only at EU level, but also at the level of the Member States, with the Bundeskartellamt decision against Facebook arguably playing a key role in this process, as it is the first to recognise and rethink the limits and objectives of competition policy, thereby opening the discussion whether a similar approach would be feasible at European level. Indeed, the decision of the Bundeskartellamt is centred around the idea of combining personal data from different sources, without the consent of the users, a practice which would be prohibited by Article 5(a) of the DMA. In light of the recent changes of German Competition Act, the Bundeskartellamt has started to double-down on its approach, opening new probes into both Facebook and Amazon. Furthermore, this trend is also visible outside the EU, for example in the UK, where the Competition and Markets Authority now has a dedicated Digital Markets Unit.
Going forward, reflection is needed on the use of competition policy as a tool for digital sovereignty and the limits of this approach. The reshaping of competition law to be fit for the digital age is a normal reaction to the challenges brought by technological developments. However, changing the goals of competition policy is no small feat, and should, therefore, be addressed with utmost care. A crucial role will be played in this sense by the DMA.
Moreover, careful reflection is also needed on using this newly reshaped competition policy to pursue digital sovereignty. First and foremost, the limits and goals of the concept of digital sovereignty should be defined, as well as the fine balance between strategic autonomy and collaboration. The recent Apple SO showcases a change of tone in EU competition policy, potentially providing an insight into what to expect in the future.
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