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Apple Quietly Addresses Antitrust Criticisms

By Evan Niu, CFA – Jun 24, 2020 at 7:30AM

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The Mac maker is starting to loosen some restrictions to appease regulators and lawmakers.

Apple (AAPL -1.51%) has never let iOS users choose default apps, instead always directing customers to its own offerings for core functionalities like email or web browsing. What may seem like a minor inconvenience for users that prefer third-party offerings has over the years evolved into a major antitrust criticism, attracting scrutiny from regulators and lawmakers around the world.

In line with previous reports earlier this year that Apple was considering changing its long-standing policy, the Mac maker has quietly just confirmed that it will soon allow users to change some default apps.

Two iPhones displaying iOS 14 examples

Apple detailed iOS 14 this week. Image source: Apple.

Loosening up

Apple kicked off its annual WWDC developer conference this week, using a virtual format due to the ongoing COVID-19 pandemic. In addition to major announcements like transitioning Macs to its own Apple-designed chips, the company snuck in a feature slide that confirmed that iOS 14, which will be released in the fall, will finally allow users to choose default email and browser apps.

Like many tech giants, Apple has been under intense antitrust scrutiny in recent years due to its immense market power. The ability to change default apps is among the lesser concerns compared to other allegations, including a lawsuit filed last year by developers alleging that Apple monopolizes app distribution on its platform through the App Store. Critics also argue that the company should not be able to compete in the same platform that it operates.

In easing the policy around default apps, Apple is clearly trying to address at least one anticompetitive concern.

Is two categories enough to appease regulators?

However, it appears that Apple is only planning to let users change the default apps for email and web browsing, which represent just two categories out of countless functions that people use their iPhones for. For example, users won't be able to change the default music app to Spotify (SPOT -3.36%) or the default map app to Alphabet's Google Maps. Other important categories would include things like the calendar or messaging app.

Apple has long required third-party web browsers on iOS to use the same underlying rendering engine, Apple's WebKit, which essentially means that all web browser apps on the platform are little more than wrappers with minor user interface variations. That requirement isn't going away.

Apple is making other minor concessions as well. The HomePod smart speaker will soon natively support third-party music-streaming services like Spotify, which was part of the Swedish company's official antitrust complaint to European competition regulators filed last year. The European Commission announced just last week that it was formally opening an antitrust investigation -- in part in response to Spotify's complaint -- into Apple regarding its App Store and Apple Pay offerings.

"Mobile applications have fundamentally changed the way we access content," European competition chief Margrethe Vestager said in a statement. "Apple sets the rules for the distribution of apps to users of iPhones and iPads."

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Spotify Technology. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Spotify Technology. The Motley Fool has a disclosure policy.

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