3 juillet 2023
June 2023 – 3 de 6 Publications
From a competitive perspective, Apple's entry into the relevant markets of the metaverse is good news. Apple will exert additional competitive constraints on its rivals like Meta. In principle, this market entry should lead to more competition, e.g. in the development of metaverse products, but also to more price competition between the providers.
Competition law sets the boundaries within which companies can develop and operate in the markets of the metaverse. Of course, the prohibition of restrictive agreements pursuant to Art. 101 TFEU / Sec. 1 Act against Restraints of Competition (“ARC”) also applies to the markets of the metaverse. The providers of metaverse products may therefore, in principle, not restrict the competition existing between them on the basis of agreements or concerted practices. Nor may they, in principle, restrict competition by means of vertical agreements or concerted practices with upstream or downstream providers. Furthermore, Art. 102 TFEU / Sec. 19, 20 ARC prohibit the abuse of a dominant market position and the abuse of relative or superior market power respectively.
In addition to this competition law legal framework, there is the Digital Markets Act (“DMA”). The DMA is addressed to so called gatekeepers operating a core platform service. The DMA also provides for a number of market conduct restrictions which may also have an impact on the offer and use of metaverse products.
In a similar vein as the DMA, Sec. 19a ARC is addressed to undertakings with paramount significance for competition across markets (“UPSCAM”). UPSCAMs are also subject to a number of market conduct obligations, which could impact their metaverse offering.
The German Federal Cartel Office has determined that the provision of Sec. 19a ARC applies to Apple. At the beginning of April 2023, the FCO decided that Apple has a dominant, or at least strong market position at all vertically linked levels, starting from smartphones, tablets and smartwatches via the proprietary operating systems to the Apple App Store as the only digital distribution platform for apps and other software products on Apple devices available to both app publishers and users. Apple's overriding cross-market importance for competition within the meaning of Sec. 19a (1) ARC thus creates a position of power for the company that gives them scope for cross-market behavior that is not sufficiently controlled by competition, the German Federal Cartel Office said.
The metaverse provider Meta is also an addressee of Sec. 19a ARC and proceedings under Sec. 19a ARC.
In its decision against Meta, the German Federal Cartel Office also considered Meta's metaverse offering in the context of its cross-market significance. The German Federal Cartel Office said that Meta, on its stable and growing resource base, has the opportunity to steadily expand the ecosystem, possibly to a metaverse based by proprietary VR and AR hardware.
The German Federal Cartel Office can prohibit addressees of Sec. 19a (1) ARC from engaging in a range of conduct pursuant to Sec. 19a (2) ARC. Some of these prohibitions could also become relevant for the metaverse offerings. E.g.:
It is not yet entirely clear to what extent the DMA applies to the markets of the metaverse. The Commission stated that the DMA will provide tools to foster contestability in the metaverse, either because the relevant services are within its scope or through the provisions that ensure future proofing of the DMA.
It can be assumed that undertakings such as Apple and Meta fall under the DMA with some of their core platform services.
However, it is less clear to what extent and when the metaverse also concerns core platform services in the sense of Art. 2 (2) DMA. It is conceivable that the online intermediation services (i.e. the app stores), online social networking services and operating systems for the metaverse can be covered by the DMA. However, pursuant to Art. 3 (1) (b), (c) DMA, these core platform services must also be an important gateway for business users to reach end users and the gatekeeper must enjoy an entrenched and durable position in its operations (or it must be foreseeable that it will enjoy such a position in the near future). As regards the core platform services element, this market position is rebuttably presumed if the core platform service had at least 45 million monthly active end users established or located in the EU and at least 10 000 yearly active business users established in the EU in each of the last three financial years.
Assuming that the core platform services of the metaverse will be covered by the DMA in the future, numerous behavioural obligations and restrictions would take effect for the gatekeepers, e.g.:
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