Legal assignment The U.S. firm Apple operates a digital ecosystem with its own hardware and software: Ethics and Legal Implications Assignment, UMS, Malaysia

University University Malaysia Sabah (UMS)
Subject Ethics and Legal Implications

Legal assignment The U.S. firm Apple operates a digital ecosystem with its own hardware and software. Part of this ecosystem is an app store for which Apple holds a dominant position. Apple changed its policy of defaults in 2021: Users downloading applications from suppliers other than Apple would be asked explicitly whether they consented that the providers of these apps processed their data.

This also applies to apps that use tracking to display targeted advertising. Meta, another digital ecosystem operator, offers popular apps for services such as Instagram or WhatsApp. At the same time, Meta holds a dominant position in online advertising. Meta collects and uses data about user preferences to offer to advertise aligned with user preferences.

Meta, like Apple, moreover has ambitious goals for developing new services involving Virtual Reality (VR). Both firms use their services also to facilitate the development of VR, which relies heavily on the analysis of user preferences. Meta currently appears to be at the forefront of VR technology. In Meta’s view, Apple is using its new policy to oust app developers cooperating with Meta from Apple’s ecosystem.

This risk exists also objectively. Meta, hence, files a complaint with the European Commission, i.e., the main EU competition agency. Meta claims that Apple is abusing its dominant position under Art. 102 of the Treaty on the Functioning of the European Union (TFEU). In its defense, Apple raises the following arguments:

  • The General Data Protection Regulation requires suppliers of online services to get the consent of end users before processing their data. Regarding its App Store services, Apple has to comply with this requirement.
  • Meta knows that although end users value privacy, they regularly provide their consent without thinking in order to quickly get access to online services. By exploiting this behavior, Meta is abusing its dominant position in online advertising.

(1) Is Apple, on balance, acting in the interest of consumers?

(2) How would you structure your legal reasoning on whether (a) Apple or (b) Meta is abusing its dominant position in terms of Art? 102 TFEU?

(3) Google is another operator of a digital ecosystem, including a market-dominant search engine.

Google supplies online advertising services which rely, among others, on the analysis of search queries. In Europe, Google uses pop-up windows to inform end users of their GDPR rights. Google has stated publicly that it supports Apple’s policy change. Is Google acting anti-competitively?

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