A little over a week ago, we reported that Apple plans not to include its new Apple Intelligence AI technology in iPhones sold in the European Union (EU). Apple is concerned that some of the AI features coming to certain iPhone models in the iOS 18 update may violate privacy regulations set out in the EC’s Digital Markets Act (DMA). Given that such violations could lead to fines of up to 10% of Apple’s $383 billion in global revenue for fiscal year 2023, the tech giant would prefer to play it safe.
Apple’s decision has infuriated Margrethe Vestager, the European Commissioner for Competition. In response to a question posed during a Q&A session, she said: “Apple says they won’t release new features in an IRS environment, but they say it’s because of their European obligation, which is to open up to competition, which is like a shortened version of the DMA. I find it very interesting that they’re saying they’re going to deploy their AI in places where there’s no obligation to enable competition. I think this is the most astonishing, overt declaration that they know 100% that this is another way to kill competition in places where they’re already based.”
EC Competition Commissioner Vestager criticizes Apple for removing AI from iPhone units in the EU | Image courtesy – EC
In other words, Vestager is accusing Apple of withholding its AI features in the EU because the company knows that Apple Intelligence will be deemed uncompetitive by the EC. What Apple knows is that if it doesn’t bring Apple Intelligence to the EU, its AI features won’t be accused of violating the DMA. Now, the EC announced last week that it had issued a preliminary ruling against Apple that it violated the DMA because of its App Store, and Apple is facing a huge fine.
The European Commission has conveyed its preliminary opinion to Apple that its App Store rules violate the Digital Markets Act (DMA) because they prevent app developers from freely directing consumers to alternative channels for offers and content. Furthermore, the Commission has launched new non-compliance proceedings against Apple due to concerns that Apple’s new contractual requirements for third-party app developers and app stores, including its new Core Technology Fee (CTF), are insufficient to ensure effective compliance with Apple’s obligations under the DMA. – European Commission
The lack of Apple Intelligence on the iPhone 15 Pro, iPhone 15 Pro Max, and iPhone 16 series in the EU will certainly hurt iPhone sales in the region. However, non-AI changes in iOS 18, such as the ability to customize app icons on the home screen, will remain available to iPhone users in the EU. It is expected that Apple will eventually be able to add new AI features to iPhone units on the market, but this may require some compromises on the part of the EC and Apple.
