French Finance Minister Bruno Le Maire criticised the dominance of foreign firms in European marketplaces on Tuesday (8 September), directly referencing US tech giant Apple’s power in the digital arena and calling for the creation of more ‘European champions.’
Speaking at an event on digital competitiveness organised by the German Presidency of the EU, Le Maire hit out at the ‘extreme concentration’ of certain markets in Europe, where “a small number of very large international platforms are reaping most of the profits.”
Giving an example of such a scenario, the French finance minister cited Apple’s business operations as a particular area that has been bad for competitiveness in Europe.
“Apple’s market capitalisation is now larger than the capitalisation of all the CAC 40,” he said, referring to the benchmark French stock market index.
“It is a competition issue when these companies develop strategies to lock in their users in their services and ecosystems,” Le Maire added, in a veiled reference to Apple’s app store operations, which has long been a source of frustration for Apple’s rival firms and for smaller companies seeking greater visibility on the platform.
App store probes
In June, the European Commission opened a formal antitrust probe into the app store to investigate whether Apple’s rules for the distribution of apps violate EU competition rules.
Swedish music streaming service Spotify has not held back on the criticism of the operation of the app store, complaining that Apple had been restricting rivals to its own music service, and hitting out at the high fees imposed on app developers.
Apple imposes a 30% fee on the sale of apps presented on its app store, a requirement which several firms have claimed represents an unfair and disproportionate levy.
Apple is currently embroiled in a dispute with US video game developer Epic Games, whose ‘Fortnite’ game was kicked off the app store after Epic implemented a technical feature that would allow users to make in-app purchases directly with the company, rather than through Apple, thereby bypassing the 30% levy.
Apple did not immediately respond to a request for comment.
In Europe, the case has caught the attention of the German antitrust chief Andreas Mundt, who said the Federal Cartel Office is following the dispute closely, with a view to potentially opening a deeper probe into the row.
On the international stage, the Australian Competition and Consumer Commission (ACCC) announced on Tuesday that it is launching a probe into the practices of both Apple and Google app platforms.
Speaking further on the Apple case on Tuesday, competition lawyer Damien Geradin said Apple’s app store is an example of a ‘closed system’ market, characterised by “large economies of scale, direct and indirect network effects.”
New Competition Tool
Back in Brussels, recently regulatory moves have attempted to redress the balance between dominant platforms and smaller businesses that rely on such services, but there is a clear consensus that more needs to be done.
The EU’s Platform-to-Business regulation, which came into force in June 2019, was put forward in an attempt to oblige ‘online intermediary services’ to be transparent in their business terms and rules.
However, it is the Commission’s ‘new competition tool,’ set to be unveiled before the end of the year alongside potential ex-ante regulation in the EU’s Digital Services Act, that will attempt to rebalance certain market disparities that could emerge, particularly in the digital economy.
The issue has only become more pertinent in the context of the coronavirus outbreak, as there is a concern in the EU that some of the bloc’s smaller and innovative firms, which have lost market value due to the coronavirus outbreak, may be acquired by larger international companies.
“We should not wait for all European companies to be overtaken by foreign giants to react,” Le Maire said on Tuesday.
“This regulation would specifically target digital platforms that had acquired dominant positions on the market with significant network effects and acting as gatekeepers, it would prevent locking in, and predatory strategies with tailor-made and proportionate measures.”