Europe charges Apple with antitrust breach
The European Commission has issued Apple with a Statement of Objections after concluding that the company breach of EU competition law regarding streaming apps.The commission published a statement of objections highlighting its concerns over the mandatory use of Apple’s proprietary in-app purchase system, where it charges developers a 30% commission fee on all transactions.
A complaint lodged with the commission by Spotify in September last year argued that Apple uses its App Store to stifle innovation and limit consumer choice in favour of its own services.
Spotify, Tile, and Match representatives criticised Apple in front of US Congressional leaders this month, accusing the tech giant of using its app store to further its own business interests. An antitrust hearing was held that examined competition in app stores, seeking to explore issues in platform ownership.
Spotify reported that Apple had threatened to ban the streaming music service from the app store unless it used the in-app purchases feature and paid the 30% fee Apple usually charges for the service.
The core of the issue is that Apple enforces a 15-30% commission on all digital goods in-app purchases that take place in apps on the iPhone. Apple’s rules do not allow developers to use alternate payment systems or even tell users that alternative payment methods may be available on their website.
Known as the “Apple tax,” this 30 percent cut has long been targeted by companies like Netflix and Spotify. Apple has defended its policies, arguing that the revenue it earns contributes toward the costs of maintaining the App Store and enforcing its content, privacy, and security guidelines.
This is the first EU antitrust charge against the tech giant, and will likely result in the company being forced to change its policies, alongside a potential fine of up to 10% of its global turnover.
“Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store,” said European Commission executive vice-president Margrethe Vestager.
“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.”
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