European Union regulators are reportedly taking a close look at contracts between Apple and its iPhone carrier partners in an attempt to determine if the company’s strict terms amount to anti-competitive behavior. Apple’s practice of requiring carriers to commit to selling a certain number of iPhones is coming under particular scrutiny.
[S]ome of Apple’s competitors complain that the big purchases Apple requires from carriers strongly pressure them to devote most of their marketing budgets to the iPhone, leaving little money to promote competing devices, said an executive at one of Apple’s rivals, who declined to be named to avoid jeopardizing carrier relationships.
That carriers allow Apple to tell them how many phones they must sell, and the threat of penalties if they fail to do so, demonstrates just how much leverage as a bargaining device the iPhone has. While carriers are not required to sell the iPhone, the realities of the marketplace are such that carriers believe they have little choice, and must agree to Apple’s terms to remain competitive with other carriers.
The European Commission has not as yet launched a formal investigation of Apple, with spokesman Antoine Colombani merely saying that the competition regulators are “monitoring the situation”. In its defense, Apple will say only that its contracts are compliant with all local laws.