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Apple investigations chart new territory for EC's scrutiny of big tech

The European Commission's antitrust probes into Apple Inc. are the latest in a long line aimed at U.S. tech companies, with data compiled by S&P Global Market Intelligence showing similar investigations yielded large penalties and significant changes to software products.

The European Union's executive branch announced June 16 it was opening separate investigations into the iPhone-maker's App Store policies and Apple Pay payments service. The former follows complaints from music streaming service Spotify Technology SA and Japanese e-commerce firm Rakuten Inc. over the 30% Apple charges developers and third-party vendors for subscriptions and e-book sales through its digital marketplace.

The probe is the EC's first into a mobile app store and was promptly followed by a statement from Microsoft Corp. urging U.S. regulators carrying out a probe into digital marketplaces to adopt a similar focus. The U.S. Department of Justice is considering an antitrust probe into Apple's App Store, Politico reported June 24.

Under EU law, the EC can impose behavioral and structural remedies, while fines "shall not exceed 10% of [a company's] total turnover in the preceding business year." Whatever the outcome, previous EC antitrust cases against large U.S. tech companies suggest the probes could take several years.

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If the EC finds that Apple has breached competition law and issues the maximum 10% fine in each investigation — which it has never done — it would set records for the European regulator's actions in the tech sector. Apple's net income for full year 2019 was $55.26 billion.

The EC's largest penalty within the tech industry to date was handed down to Google LLC in the same operational sub-sector that concerns Apple's App Store — software publishing. The EC in 2018 said the Alphabet Inc. unit broke antitrust laws by abusing its Android smartphone operating system's market dominance by bundling its search engine and Chrome apps into the software. It was also found to have violated the rules by making payments to manufacturers and mobile network operators to exclusively include the Google search app on handsets.

In many cases, companies were ordered to implement behavioral remedies — changing their practices — as well as pay fines.

Google was fined a total of €4.34 billion, eclipsing the previous record of €2.4 billion from 2017 over its manipulated search results, and ordered to end its "illegal" practices within 90 days of the decision. Despite appealing both rulings, the company later announced changes to its licensing model for Android in Europe by introducing fees for manufacturers wanting to preload its apps onto their handsets, among others.

As part of its landmark decision against Microsoft in 2009, the EC fined the Windows operating-system maker €561 million for failing to promote a range of web browsers beyond its proprietary Internet Explorer to EU users. The firm added a "Browser Choice" pop-up in March 2010, but the following year the feature was dropped from a Windows 7 update, which Microsoft blamed on a "technical error."