EU warns Apple it must open its iPhone operating system to rival developers

By Louis Goss

Apple has received a warning from the European Union that it must ensure devices made by rival companies work with its own iPhone devices and closely guarded iOS operating system, in accordance with the Digital Markets Act.

In a statement, the EU called on Apple to ensure devices including smartwatches, headphones and virtual reality devices are interoperable with its own smartphones and their operating systems, including iOS.

The EU also called on Apple to ensure the process it uses to assess interoperability requests from third-party developers is "transparent, timely and fair," in line with the DMA which requires that tech companies offer free and effective access to software and hardware features to rivals.

The EU's warning marks a first step in what could see the bloc launch a formal investigation into Apple that could eventually result in the California tech firm being fined. The DMA gives EU's regulators the power to issue tech companies with fines equivalent to 10% of their annual turnovers.

"Today is the first time we use specification proceedings under the DMA to guide Apple towards effective compliance with its interoperability obligations through constructive dialogue," EU executive vice-president, Margrethe Vestager, said in a statement.

"We are focused on ensuring fair and open digital markets. Effective interoperability, for example with smartphones and their operating systems, plays an important role in this," Vestager added.

The EU's DMA first entered force in November 2022 with the aim of ensuring a competitive environment in Europe's technology sector, including by requiring that the world's top tech firms make their digital platforms "interoperable".

Apple (AAPL) currently gives third party developers limited access to the iPhone's Siri voice command system and blocks rivals developers from accessing its contactless payments system which is reserved for users of its own Apple Pay app.

The DMA's interoperability requirements seek to ensure the six "gatekeepers" in digital markets - Alphabet (GOOGL), Amazon (AMZN), Apple, ByteDance, Meta Platforms (META), and Microsoft (MSFT) - ensure their own platforms work with ones developed by rivals.

EU regulators have previously focused on ensuring gatekeeper tech companies with messaging apps including Meta - which owns WhatsApp and Facebook messenger - ensure those platforms are able to send messages to users on rival apps like Telegram.

Apple shares were up 2% in Thursday's pre-market session having advanced by 27% over the previous 12 months.

Apple and the European Union were contacted by MarketWatch for comment.

-Louis Goss

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09-19-24 0642ET

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