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Apple Stews in EU Pressure Cooker

By Rachelle Dragani MacNewsWorld ECT News Network
May 29, 2013 5:00 AM PT

The European Union reportedly is launching an antitrust investigation into Apple's iPhone sales tactics.

Apple Stews in EU Pressure Cooker

Company CEO Tim Cook may have made it through last week's congressional hearings on the company's corporate tax policies relatively unscathed, but that doesn't mean the regulatory pressure is off for the tech giant.

The European Commission last week sent several telecom operators a nine-page questionnaire asking for information on ways Apple might be attempting to shut out its smartphone competitors, according to the Financial Times.

The action was a response to complaints from wireless providers that alleged Apple's distribution terms made it difficult or impossible for rivals to secure better sales deals.

The survey asks whether Apple engages in unfair practices such as restricting competitors' marketing budgets; requiring sales clauses that guarantee it subsidies equal or better than those given its rivals; or imposing technical constraints that would prevent a device from working on Europe's high-speed networks.

In the U.S., it is relatively accepted that the deals offered to rival providers must be more or less comparable, said Herbert Hovenkamp, professor of law at the University of Iowa.

If one smartphone maker gets a better deal than its rivals -- the allegation the EU is investigating -- the legality gets murky.

Though the U.S. laws aren't exactly clear, Europe's are even less so, Hovenkamp said, making the outcome of the action concerning Apple difficult to predict. If it turns out the company has violated European regulations, it could be slapped with a stiff penalty.

"The typical remedy in the EU is an injunction and a fine, and those can be pretty big," Hovenkamp told MacNewsWorld.

Market Size Matters

The probe is in its earliest phase. If the European Commission wants to pursue the case further, it will have to establish that Apple is the dominant smartphone provider on the continent. With Android handsets gaining marketshare each quarter -- especially those made by Samsung -- that might be a difficult claim to prove, said Hovenkamp.

"In Europe, they might require only a 30 or 40 percent hold on the marketshare to be considered dominant, whereas here it might be more like 60 or 70," he noted.

Still, if Apple weren't dominant in Europe, the disputed deals probably wouldn't be taking place, Hovenkamp added.

"The thing about these deals is that you have to be fairly dominant in order to make them in the first place," he pointed out. "If you've got a 40 percent marketshare, that's a lot of clout, and you can secure that place with the carrier. So the fact that they're doing these practices in the first place is evidence that [Apple] does have some dominance. Those are undoubtedly the kind of points that the EU will make, and the things they will be looking into."

Apple's European policies adhere to EU regulations, the company has said. It did not respond to our request to comment for this story.

New Look for iOS 7

There's no word yet on when a new iPhone is headed to shelves, but Apple is expected to launch the latest version of its mobile software, iOS 7, at its Worldwide Developers Conference early next month. While iOS 6's debut was notable mostly for its new features, such as Apple's much-maligned in-house maps app, iOS 7 reportedly will launch with a completely refreshed interface.

The makeover is under the direction of Jony Ive, the company's senior vice president of industrial design, who took over the platform following Apple's executive turnover last fall. Ive reportedly is moving toward a sleeker, flatter design that gets rid of the shadows and shine that currently appear on several iOS icons. The design overhaul reportedly will have a muted color scheme and possibly a more streamlined look.

Ive apparently is moving away from the skeuomorphic designs, such as the calendar app that resembles a physical calendar, that were a favorite of Steve Jobs.

It's about time that Apple made some changes to its interface, said John Feland, CEO and founder of Argus Insights.

"While Apple has been losing mindshare to Samsung and others, their technology innovations in the past few generations have been nothing short of amazing," Feland told MacNewsWorld. "Apple just has not yet translated those technology innovations to big changes in the user experience."

Those changes will help Apple keep up with current design trends, Feland maintained, noting that Windows 8, Android and BlackBerry all feature sleeker and simplified interfaces.

More important than following the competition, though, a new iOS look will complement Apple's overall user experience.

"Beyond the cosmetic shift in flatter icons [and] thinner and bigger fonts, the inclusion of both widgets and unified in-boxes reflects a shift from an app bias to an activity bias," Feland pointed out.

"Since Apple reinvented the App Store," he said, "the sea of apps available has pushed a level of complexity to iPhone users that does not mesh with the Apple design manifesto, so a shift is necessary."

Rachelle Dragani is a freelance reporter based in Brooklyn, NY. She enjoys staying on top of e-commerce deals, reporting on what new gadget is coming your way, and keeping tabs on anyone trying to hack into your info. Feel free to e-mail her at rachelle.dragani@newsroom.ectnews.com.

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