The Italian Competition Authority recently announced a fine of Euro98.6 million (approximately US$116 million) for the abuse of market dominance by Apple. The fine was mainly for the application tracking transparency functionality introduced in the Apple iOS 14.5 system.
Since the release of iOS 14.5 in April 2021, Apple has required applications to obtain user clearance before cross-application and website tracking of user activities for individualized advertising, a feature called “Application Tracking Transparency”. If the user chooses the option ” Requires App not to track ” , an advertising identifier that will not be able to access the device is applied. In a press release and executive summary issued by the Italian Competition Authority, it was noted that the ATT rules were “disproportionate” and constituted “damage” to the application of developers and advertising. Ultimately, the agency found that apples abused their dominant position in the EU market. Regulators do not question the policy of apples to enhance user privacy and security protection per se, but point out that the ATT function has “overburdened” developers. In particular, users of iPhone and iPad in the EU receive both ATT tips and permit windows in connection with the General Data Protection Regulations, and the Italian Competition Authority finds that this “dual consent” requirement is detrimental to the interests of application developers and advertisers. The Italian Competition Authority has imposed a fine of Euro98635416.67 on Apple, Apple International and Apple Italy for abuse of market dominance. Apple, through its App Store, is the dominant market developer in providing online application distribution platforms to iOS users, acting in violation of article 102 of the Treaty on the Functioning of the EU.
The complex survey was conducted by the Authority in collaboration with the European Commission, competition regulators of other member States and the Data Protection Agency of Italy. The findings confirm the restrictive nature of the ATT policy from a competition law perspective – Since April 2021, apples have applied privacy rules to third-party iOS developers distributed through App Store. In particular, third-party application developers must obtain specific user approval for data collection and its connection for advertising purposes through the apple ATT bullet window. However, the bullet window itself did not meet the requirements of privacy regulations, forcing developers to repeat requests for user consent for the same purpose. The Authority found that the provisions of the ATT policy were imposed unilaterally, to the detriment of Apple ‘ s business partners. At the same time, these provisions were found to be “disproportionate” to the data protection objectives claimed by the company. Since user data are a key input element for online individualized advertising, the existing ATT policy necessarily leads to dual approval requests, which in fact limits the collection, relevance and use of such data. As a result, the dual consent requirement caused damage to developers, advertisers and advertising intermediaries who relied on advertising. Double consent requests make the ATT policy “unproper” and therefore apples should have ensured the same level of privacy protection for users by allowing developers to “one step” access to user image analysis.
In a statement to various media outlets, Apple indicated that it would appeal the decision and emphasized the privacy protection benefits of using the tracking transparency function. Earlier this year, Apple warned that due to regulatory pressure from countries such as Italy, France, Germany and Poland, as well as the general requirements of the European Commission, it might be forced to stop providing the application tracking transparency function within the EU.
