EU charges Apple with antitrust abuse
The EU has formally charged Apple with breaking antitrust law by charging high commission fees in its App Store and forbidding app developers from telling their customers about other ways to subscribe to their services.
The charges relate to a complaint filed two years ago by the music streaming service Spotify.
After investigating the complaint, Margrethe Vestager, the EU’s competition commissioner, said Apple “deprives users of cheaper music streaming choices and distorts competition”.
“We are concerned that Apple’s rules negatively impact its rivals by raising their costs, reducing their profit margins as well as their attractiveness on the Apple platform,” Vestager told a press conference.
She added that Apple should stop engaging in anti-competitive practices but did not spell out what remedies the company should take.
Vestager also said Brussels was in touch with regulators in the US, Australia and the Netherlands over similar cases.
Apps that wish to use Apple’s App Store, the only official way to reach the world’s 1bn iPhones, have to pay up to 30 per cent commission and agree to a strict set of rules that Apple said is designed to ensure quality.
“The Commission’s preliminary view is that Apple’s rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers,” said a statement on the case.
“This in turn leads to higher prices for consumers for their in-app music subscriptions on iOS devices. In addition, Apple becomes the intermediary for all IAP (in-app purchases) transactions and takes over the billing relationship, as well as related communications for competitors.”
The case is the most high profile antitrust case currently open in Brussels and the move represents the first time that EU regulators have issued formal charges against Apple.
The case is likely to take many years to wind through the EU courts in Luxembourg and any verdict is likely to be appealed. If Apple is found to have breached EU law it could face a fine of up to 10 per cent of its global turnover.
The move comes a few days ahead of a trial in the US led by game developer Epic, which also accused Apple of competition abuse because of its App Store rules, and comes in the same week that Apple reported a 27 per cent year-on-year increase in sales of services, the division that includes the App Store.
Spotify welcomed the EU’s move against Apple. The company’s chief executive and founder Daniel Ek wrote on Twitter: “Today is a big day. Fairness is the key to competition . . . we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers.”
Apple said: “Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store.
“At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. 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.”