The General Court Rejects Apple’s Appeal on its Designation Decision (Cases T-1079/23, T-1080/23 and T-214/24)

The General Court issued the third ruling relating to the appeals that different gatekeepers had put forth before the EU courts (see comment on the ByteDance and Meta cases). This time, it was Apple’s turn on two different counts: i) the designation of its iOS and of its app stores; and ii) the non-designation of iMessage after a fully-fledged market investigation.

Apple lost on all counts due to different reasons. However, the appeals reveal the General Court’s deference towards the European Commission’s (EC) reasoning on its designation decisions, once again. In principle, there is nothing problematic with that. That is, if undertakings had a clear indication about what evidence is enough to rebut the EC’s arguments when designating. But before going into all of that, let’s first look at the parts of the ruling that were found inadmissible, which made up, actually, the majority of the General Court’s pronouncements.

Out of Sight: Two Grounds for Appeal Found Inadmissible

For the most part, the General Court’s ruling was about what it could not pronounce itself on, rather than about what it could. This outcome was prompted, however, by the way in which Apple framed its appeal of the designation decision relating to its iOS core platform service (CPS) and the EC’s description of iMessage as a number-interpersonal communications service (NIICS, aka messaging service).

Building on the intense campaign that Apple has been conducting in advocating for the DMA’s repealing, the gatekeeper’s grounds of appeal reflect this same lobbying strategy. It’s all or nothing for Apple. Due to this reason, Apple went all in and tried to seek the annulment of the effects of applying Article 6(7) DMA to its iOS, in the understanding that the application of the vertical interoperability mandate infringes upon the principle of proportionality. In other words, on the first opportunity it had to contest the DMA’s substantial obligations (aside from the actual direct appeal to the regulation’s text after its publication), the gatekeeper decided to go all in and seek to annul one of the provisions within the DMA that, to its own mind, harms its walled garden ecosystem and business model.

To my mind, this was a misstep on Apple’s side. As much as it wants to repeal the regulation and its effects, it could not seek to equate the impacts of designation with the application of the DMA’s obligations. And that is precisely what the General Court recounted within its ruling, that Article 6(7) has no direct legal connection with the designation decision (para 36 of the ruling). Expanding on this argument, the General Court explained that “Article 6(7) of the DMA does not govern the conditions for designating an undertaking as a gatekeeper, the assessment of which is the main subject of the designation decision, but merely defines the interoperability obligations to which that undertaking is subject only once such designation has occurred” (para 41). The plea of illegality raised by Apple was, therefore, found inadmissible (para 62).

The gatekeeper’s plea surrounding the annulment of the EC’s reasoning in describing iMessage as a NIICS followed the same rationale, but the General Court managed to innovate in terms of what we have learnt so far about the DMA’s adaptability with respect to the legal and economic environment in which it is placed. Apple alleged that the classification of iMessage as a NIICS provoked two types of consequences: i) the opening of the market investigation under Article 17(3) DMA to determine whether the CPS merited designation; and ii) it being subject to regulatory processes provided for under the DMA (para 105). The EC maintained that its description of iMessage as a NIICS did not bring about a distinct change in its legal position (para 103).

The General Court recognised that the fact that the EC’s classification was found in the recitals of Apple’s designation decision did not necessarily mean that the plea was to be found inadmissible. On the contrary, the operative part of a decision can be capable of producing legal effects and, consequently, of adversely affecting a person’s interests (para 111). Notwithstanding, the General Court did turn to the designation decision’s operative part to disentangle what the EC had and had not said.

As one can double-check when reading the decision, the EC engaged in detail with Apple’s argument that iMessage did not meet the definition of a NIICS in the sense of the DMA (on paras 139 to 146 of the designation decision). On top of that, the EC pinpointed that the service met the quantitative thresholds that led to the application of the gatekeeper presumption (paras 153 to 156), but it did not get into the nitty-gritty of metering whether iMessage met the requirements under Article 3(1) DMA. For instance, it did not get into the detail of assessing whether iMessage operated as an important gateway for business users to reach end users, given that Apple had put forward arguments rebutting that presumption that manifestly called it into question (paras 157-158).

The General Court points this argument out as particularly relevant to assess whether Apple’s plea should be accepted, because iMessage is not referred to in the operative part of the designation decision as a CPS constituting an important gateway (para 112) and that, therefore, meant that the EC’s description of iMessage as a NIICS “does not constitute the essential basis for the operative part of the designation decision” (para 113 of the ruling).

Expanding on that argument, the General Court went on to analyse whether the opening of the market investigation had produced any binding and concrete legal effects on Apple, given that “the DMA does not provide for any obligation or entail any legal consequences solely on the basis of the classification of a service” (para 115). Here’s where the nuance comes into play, given that the General Court interprets that the EC’s classification of iMessage as a NIICS “cannot be regarded as definitively established for the future” (para 120). Under the assumption that the EC is compelled every three years to evaluate the DMA as a whole and the list of CPSs that have been designated in particular, the General Court believes that were the EC to reconsider iMessage’s designation, it would be forced to conduct a fresh assessment of the circumstances. This is a particularly salient finding coming from the General Court, given that it recognises the DMA as an adaptable regulatory framework that can be stretched and flexed to meet the EC’s enforcement strategy at a given point in time. By doing that, it also reinforces the idea that anything can happen in terms of designating undertakings as gatekeepers, given that the regulation provides enough leeway to the EC to adapt to the “very rapidly changing and complex technological nature of CPSs” (para 119).

Additionally, the General Court puts down the final nail in the coffin of the inadmissibility of the plea by reinstating that only DMA impacts can be accounted for as far as the classification as a NIICS is concerned. Apple argued that the NIICS definition under Article 2(9) DMA built on the definition in Article 2(7) of the European Electronic Communications Code (EECC), so that such classification has consequences for the implementation of the EECC by the competent national regulatory authorities, i.e., the telecoms national authorities (para 123). To the extent that the DMA and the EECC are separate legal regimes and the latter does not contain any provision stipulating that the national regulatory and other competent authorities are bound by any NIICS classification made by the EC for implementing the DMA (para 125), the General Court believes that those potential (and unintended effects) are to be left aside.

In short, the General Court found the two grounds of appeal inadmissible for different reasons. Fundamentally, the Court believes that Apple did not provide sufficient proof that there was a direct change produced by those decisions on the two aspects that I mentioned above.

And now, let’s turn to the more substantial part of the appeal, which was about the EC’s actual delineation of Apple’s AppStore as a CPS.

A CPS’s purpose as the locus of delineation

In the designation decision, the EC found that Apple’s AppStore was an online intermediation service (para 60 of the designation decision). During the designation process, however, Apple argued that each of the stores for its different proprietary devices (i.e., iPadOS App Store, watchOS App Store, macOS App Store, tvOS App Store and the iOS App Store) should have been designated as distinct CPSs, with the result that only the iOS App Store would meet the quantitative thresholds operating in favour of the gatekeeper presumption (para 64 of the ruling). It provided a myriad of arguments to that effect, such as in demonstrating that they serve a different purpose from an end user perspective (e.g., each app store differs in terms of the relevance they have for end users, para 31 of the designation decision), or that the purpose of each app store was tailored by Apple to serve the specificities of a particular device (para 33 of the designation decision).

In the end, the EC rejected the undertaking’s arguments and considered that all of the app stores served the same purpose since they, for instance, apply the same or very similar rules and policies to developers and end users across devices or they operate through the same sets of services for support or interacting with app developers (paras 39 and 48-50 of the designation decision). Thus, the regulator decided that the App Store CPS comprised the full range of app stores that are supported on different types of devices (para 71).

The General Court starts its reasoning by stating that the definition of an app store under the DMA “does not make the classification of an online intermediation service dependent either on the device on which that store operates or on the operating system on which the software applications offered within that store run” (para 79). In this same sense, it goes on to explain that Recital 14 of the DMA introduces the principle of technological neutrality, which precisely acts to avoid these types of designation questions (para 80). This is accurate and true, but now go on into more muddy waters, revisiting the same problems that I have been pointing out for a while now regarding designation. The General Court states later on in the ruling that “Apple does not provide any evidence showing that each of the App Stores, depending on the device on which it is used, is used differently from the other App Stores, whether by end users or by business users (… e.g., showing) how often each of the App Stores is used over a given period, the type of applications downloaded, the breadth of the catalogue of applications offered and how each software application store is displayed on each of the devices in question” (para 87). That is to say, Apple did not make enough of an effort in putting forward evidence that would correctly portray the idea that each of the App Stores was used for a different purpose (para 88).

The problem is that designation operates as a one-off interaction where the undertaking (set-to-be gatekeeper) notifies the EC of the circumstances in which its services operate, and the EC then contests those arguments, based on the evidence submitted before it (and, presumably, without the possibility of providing additional information that might help the undertaking’s case to avoid designation). In short, the designation process sacrifices adhering to the legal and economic reality in exchange for speed, regardless of the specific consequences that that may purport for the undertaking (and the acknowledgment of the technical reality before the enforcer’s eyes).