Apple Inc. (AAPL.US) lost the EU regulatory lawsuit, and the App Store and iOS system face comprehensive constraints from the Digital Markets Act.

The General Court of the European Union recently ruled to reject Apple Inc.'s challenge to the scope of the Digital Markets Act (DMA), meaning that Apple Inc.'s App Store and iPhone operating system will have to fully comply with the law. The court deemed that the EU regulatory agencies' designation of these services as "gatekeepers" was lawful and compliant, and Apple Inc.'s defense was not accepted. In its ruling, the court explicitly stated, "Apple Inc. is confirmed to be designated as a gatekeeper in the App Store and iOS, while actions related to the iMessage service are not admissible." As one of the tech companies facing the strongest opposition from EU regulators, Apple Inc. had previously objected on three levels: firstly, requesting obligations to enable interoperability between rival hardware and the iPhone; secondly, the decision to include the lucrative App Store in the regulatory scope; and thirdly, investigations into whether iMessage should be included in the scope but then exempted. This ruling essentially denied the first two objections. Although this ruling can still be appealed to the EU's highest court, the outcome may further strengthen the determination of EU regulators to regulate Silicon Valley companies according to the Digital Markets Act. This law has faced widespread criticism from Apple Inc. and the Trump administration. During last year's trial, Apple Inc. argued that the law "imposed extremely burdensome and intrusive obligations" that contradicted the rights enjoyed by Apple Inc. in the EU market. However, the EU Commission countered that Apple Inc.'s "absolute control" over the iPhone allowed them to "extract excess profits in markets where rivals are constrained and unable to compete fairly." The Digital Markets Act will officially come into effect in 2023, aiming to regulate the market behavior of the world's largest tech platforms through a series of "do's" and "don'ts" lists. However, since EU regulators began enforcing the law, it has sparked displeasure from former US President Trump and has been a point of contention in EU-US trade negotiations. It is worth mentioning that the Apple Inc. App Store was previously fined 500 million euros (approximately $571 million) for suspected violations, and Apple Inc. is separately filing a legal lawsuit against this penalty. Although Wednesday's court ruling is separate from the fine case, it undoubtedly provides judicial endorsement for the EU to further strengthen its regulation of large tech companies.