The European Commission has announced that has filed antitrust charges against Apple for breaching competition rules. The breaches in question relate to Apple’s App Store policies requiring music streaming apps to use Apple’s proprietary in-app purchase (IAP) system. The system is mandatory for apps that wish to sell IAPs, from which Apple takes a 30% cut. The EC also says Apple is violating “anti-steering provisions” by limiting the ability of apps distributed through the App Store to inform users of alternate ways they could sign up for a subscription.
Announcing its preliminary findings, European Commission executive vice-president, Margrethe Vestager, said:
“App stores play a central role in today’s digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers. By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition. This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”
The commission’s preliminary findings come as a result of a complaint filed by Spotify, Apple’s arch-rival in the music streaming business, in 2019. That complaint said that Apple’s 30% take of all App Store purchases–including in-app purchases was stifling innovation.
In a statement provided to Reuters, Apple said the EC complaint was “the opposite of fair competition”:
“Spotify has become the largest music subscription service in the world, and we’re proud of the role we played in that. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”
It should be noted that Apple took some of the wind out of Spotify’s complaint late last year when the company announced it was slashing its 30% fee in half for small businesses earning up to $1 million a year. But apparently, that move did not go far in appeasing some of the European Commissions’ complaints.
Our preliminary conclusion: @Apple is in breach of EU competition law. @AppleMusic compete with other music streaming services. But @Apple charges high commission fees on rivals in the App store & forbids them to inform of alternative subscription options. Consumers losing out.
— Margrethe Vestager (@vestager) April 30, 2021