Apple has once again been caught up in the web of European Union antitrust watchdog. The European Union Commission said Friday that Apple is abusing its dominant position in the distribution of music streaming apps through its App Store.
The iPhonemaker came under the radar of the European regulatory authorities last year following the complaint made by Spotify, a music streaming platform, about Apple’s license agreements in 2019.
The agreements, which apply to most apps in the Apple Store, mean that app developers have to pay a 30% commission on all subscription fees that come through the App Store. The EU Commission said Friday it considers the “mandatory use of Apple’s own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple’s App Store,” monopolistic.
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“Our preliminary finding is that Apple exercises considerable market power in the distribution of music streaming apps to owners of Apple devices. On that market, Apple has a monopoly,” Margrethe Vestager, the head of competition policy in the EU, said in a press conference.
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
Apple owns Apple Music, a direct competitor to Spotify and other music streaming apps on Apple Store. The Commission said imposing 30% commission on rival streaming apps in its Apps Store, Apple is trying to stifle competition.
“The European Commission has informed Apple of its preliminary view that it distorted competition in the music streaming market as it abused its dominant position for the distribution of music streaming apps through its App Store,” it summarized in a “statement of objections” sent to Apple.
Apple’s 30% commission on in-app purchases and other policies have been criticized by other players in the tech space. Last August, Facebook had teamed up with Microsoft and others to question Apple’s game policies, as it has affected many other game apps launched on the Apple store. Apple kicked video game Fortnite out of its store, following Epic’s, the game’s creator’s added feature, that allows players to buy virtual currency using their own credit cards, which denies Apple the opportunity to take its 30% cut.
In September, developers formed a group called the Coalition for App Fairness in a bid to force Apple to change some of its policies and remove the 30% commission. Bowing to the mounting pressure, Apple announced in November it’s cutting the commission it takes on App Store in-app purchases, from 30% to 15% from January 1. But that applies only to apps making less than $1 million yearly.
The conclusion of EU Commission’s inquiry lends credence to the growing anticompetition agitation against Apple. As a standing procedure in an antitrust investigation, Apple is required to file a statement of objection, and Cupertino has responded, saying the EU’s case 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,” Apple said a statement. “Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that.”
The investigation is yet to be concluded, but Spotify welcomes the news of EU Commission’s decision on Friday.
“The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers,” Spotify’s chief legal officer Horacio Gutierrez said in a statement.
Apple is increasingly being confronted by legal and antitrust tussles in Europe, following its 2016 notorious 13 billion euros ($15.7 billion) unpaid taxes legal battle with the Irish government, that is still in court.
Last month, the UK’s Competition and Markets Authority (CMA) launched an antitrust inquiry into Apple, due to many complaints coming from developers about the iPhone maker’s App Store.
The European authorities are stepping up their regulatory activities, and most of the US big tech companies are getting caught in their web. Late last year, the Commission introduced two new pieces of legislation that will affect how Big Tech operates. The region has long had concerns about how powerful some companies have become, and how this is a problem for smaller firms looking to compete in the European market.
The legislation is still being discussed by European lawmakers. But if passed, it will mean handing fine to companies up to 10% of their worldwide annual turnover.
Apple has over 1.8 million apps in Apple Store, and Vestager believes its influence in global tech industry should not be taken for granted.
“Apple not only controls the only access to apps on Apple devices, it also offers a music streaming service, Apple Music, that competes with other apps available in the Apple App Store, such as Spotify or Deezer,” Vestager said.