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The Future of Apple’s Walled Garden

The term “walled garden” in technology refers to a closed or exclusive set of information services provided for users, with strict control over applications, content, and media, and restricted access to non-approved resources or elements. Apple Inc. has been at the forefront of creating such an ecosystem, with its integrated hardware and software experience.

Apple’s walled garden is built on the premise of a seamless and integrated user experience. The company designs both the hardware of its devices, such as iPhones, iPads, and MacBooks, and the software that runs on them, including iOS, iPadOS, and macOS. This integration is extended to services like iCloud, Apple Music, and the App Store, creating a comprehensive ecosystem. The App Store is a cornerstone of this walled garden. It serves as the exclusive gateway for applications on iOS and iPadOS devices, with Apple overseeing the approval and distribution of apps. This allows Apple to maintain high-quality standards and security but also gives it substantial control over the app market on its devices.

Apple’s approach offers numerous benefits, such as enhanced security, optimization, and data protection. By vetting every app on the App Store, Apple minimizes the risk of malware. Users benefit from a curated selection of apps and a consistent operating system update process that ensures compatibility and performance. Moreover, the walled garden fosters a harmonious environment where hardware and software are optimized for each other, delivering a user experience that is smooth and reliable. This tightly integrated ecosystem makes it easier for users to sync their devices and share content across them, enhancing convenience.

Despite its advantages, Apple’s walled garden has its critics. Some argue that it stifles competition and innovation by setting stringent rules for app developers and limiting third-party access to Apple’s platform. The control over what can be installed on an Apple device without jailbreaking [KL1] means that Apple effectively decides which software users can and cannot use. Developers may find the strict guidelines and the necessity to share profits with Apple to be restrictive. On the other hand, the stability and large user base of Apple’s platforms can also drive innovation, as developers are motivated to create apps that stand out in a competitive marketplace. Privacy is another key aspect of the walled garden. Apple has positioned itself as a staunch defender of user privacy, with its controlled environment allowing it to implement stringent privacy protections. The company has integrated privacy features deeply into its software, giving users significant control over their data. However, this approach also means that Apple’s decisions about privacy are unilaterally imposed on its user base, which can be problematic if users disagree with Apple’s stance.

The discussion around Apple’s walled garden often centers on the balance between control and freedom. Apple asserts that its control is necessary to maintain security, privacy, and quality. However, users and developers sometimes feel this control limits their freedom to use devices and develop software as they wish. The walled garden contributes significantly to the user experience and customer loyalty. Apple users often cite the ease of use and integrated ecosystem as reasons for their brand loyalty. Apple devices work seamlessly together, and services like iCloud keep user data in sync across devices. This interconnectivity reinforces the walled garden, as customers who buy one Apple product are more likely to purchase additional devices and services to take full advantage of this integration.

Economically, the walled garden model has been immensely successful for Apple. It allows the company to capture more value within its ecosystem, from the sale of hardware to the profits made from software and services. The exclusive nature of the App Store means Apple earns a commission on every in-app purchase and paid app download, generating significant revenue for the company.

However, this economic success is also the source of much of the criticism Apple faces, as the company’s practices are often viewed as monopolistic and harmful to competition. This has attracted the attention of antitrust regulators in multiple jurisdictions, who are questioning whether Apple’s control over its ecosystem constitutes an abuse of market power. Apple’s insistence that all iOS app sales go through the App Store, with the company taking a cut of all transactions, has been contested by developers and regulators. This has led to high-profile legal battles, as seen in the case of Apple versus Epic Games.

The Digital Markets Act (DMA), a significant piece of legislation passed by the European Union, seeks to address the power wielded by large technology firms, often referred to as “gatekeepers”, in the digital market. This new regulatory framework is designed to ensure fair competition in the digital sector. It specifically targets large companies that act as gatekeepers in the digital market, aiming to ensure that these companies do not abuse their dominant positions to stifle competition and innovation. The act focuses on ensuring that smaller players have a fair chance to compete and that consumers have more freedom in choosing their services.

The DMA could usher in significant changes for Apple, starting with the possibility of allowing alternative app stores on its devices, or letting users install apps from the web, a practice known as sideloading. This move would represent a monumental shift from Apple’s current approach and could provide consumers with access to a more extensive range of apps and services. Additionally, the DMA compels Apple to let developers use alternative payment systems within their apps, which could diminish Apple’s revenue from in-app purchases and subscriptions and enable developers to bypass Apple’s fees.

Further changes may include enhancing interoperability, with Apple potentially having to open more of its services to competitors. This change could mean messaging apps working across various platforms, and devices like the HomePod or Apple Watch supporting competing services natively. However, Apple has consistently maintained that its controlled ecosystem is essential for ensuring security, privacy, and quality. The enforcement of the DMA will have to consider these factors against the need for increased competition. Additionally, the technical and logistical efforts required to implement these changes could be substantial.

For consumers, the implications of the DMA are potentially profound, offering more choice and possibly lower costs for services. Developers stand to gain from a more level playing field, where they can compete based on the merit of their offerings, free from restrictive gatekeeper policies. This could herald a new era in the digital marketplace, reshaping how consumers and developers interact with Apple’s ecosystem.

The Digital Markets Act represents a bold attempt to rein in the power of tech giants and dismantle barriers to competition. For Apple, compliance with the DMA may mean fundamental changes to its business model and the way it manages its ecosystem. These changes could lead to a more open digital market, where innovation can thrive without the constraints of walled gardens. The outcomes of this legislation may set a global precedent, influencing how digital markets operate worldwide. For Apple, the walled garden that has long been a source of strength may need to adapt to these new rules of engagement, marking a new chapter in the tech giant’s storied history.

János Tamás Papp JD, PhD is an assistant professor at Pázmány Péter Catholic University, Hungary, and a legal expert at the Department of Online Platforms of the National Media and Infocommunications Authority of Hungary. He has taught civil and constitutional law since 2015 and became a founding member of the Media Law Research Group of the Department of Private Law. He earned his JD and PhD in Law at the Faculty of Law and Political Sciences of the Pázmány Péter Catholic University. His main research fields are freedom of speech, media law, and issues related to freedom of expression on online platforms. He has a number of publications regarding social media and the law, including a book titled „Regulation of Social Media Platforms in Protection of Democratic Discourses”.

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