May 6, 2021

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Apple’s App Store Breaks Competition Rules After Spotify Complaint

Apple's App Store Breaks Competition Rules After Spotify Complaint

CEO Tim Cook speaks at an Apple event at the company’s headquarters in Cupertino, California on September 10, 2019.

Stephen Lam | Reuters

LONDON – Apple has “abused its dominance” in distributing music streaming apps through its App Store, the European Commission said Friday.

“The European Commission has informed Apple of its preliminary view that it has distorted competition in the music streaming market by abusing its dominant position to distribute music streaming apps through its App Store,” he said in a “communication. of the charges “sent to Mela.

The European Commission, the EU’s executive arm, opened an antitrust investigation into the App Store last year after music streaming platform Spotify complained about Apple’s licensing deals in 2019. This means that app developers have to pay a 30% commission on all subscription fees that come from the App Store.

On Friday, the EU said it disputed “the mandatory use of Apple’s in-app purchase mechanism imposed on developers of music streaming apps to distribute their apps through Apple’s App Store.”

App developers are also unable to inform users of alternative ways to purchase the same apps elsewhere, another issue the Commission said it was concerned about.

In response, Apple said the EU case was “the opposite of fair competition”.

“Spotify has become the largest music subscription service in the world and we are proud of the role we have played in that,” said Apple. “Again, they want all the benefits of the App Store, but they don’t think they should pay anything for it.”

A statement of objections is part of the formal process of an antitrust investigation, but does not conclude the investigation. Apple must now respond to the Commission’s concerns in writing or via an oral hearing.

‘Apple is a gatekeeper’

It comes after an e-book and audiobook distributor filed a similar lawsuit against Apple in March 2020, while Epic Games – which is already blocking the horns with Apple in a US legal battle – filed an antitrust complaint against the manufacturer. iPhone to the European Commission earlier this year.

Margrethe Vestager, head of competition policy in the EU, said that app stores play a “central role” in today’s digital economy.

“Our preliminary discovery is that Apple is a gatekeeper for iPhone and iPad users via the App Store. With Apple Music, Apple also competes with music streaming providers,” he said in a statement Friday.

“By setting strict rules on the App Store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts the competition. This is done by charging high fees on every transaction in the App Store for rivals and forbidding them to inform their customers of alternative subscription options, “he added.

Legal battles

This is not the first investigation that the European Commission has launched against Apple. The commission decided in September to take Apple and the Irish government to the EU’s highest court for what Brussels considers unfair tax practices.

The EU ruled in 2016 that Apple was to repay € 13 billion ($ 15.7 billion) in unpaid taxes to the Irish government after the latter had granted “undue tax advantages”. Apple and the Irish government have challenged the decision and the case is still in court.

In hopes of overcoming lengthy legal battles and making its markets fairer, the European Union is working on new regulation that could impact many of the US tech giants.

The Digital Markets Act is likely to put an end to what’s known as self-preference, when, for example, app search results in an Apple product prioritize those developed by the tech giant. The idea is to give smaller app developers an equal chance to be found and chosen by consumers.

The legislation is still under discussion by European lawmakers. But, in addition to imposing practical changes, it will also have the power to fine companies up to 10% of their annual worldwide turnover.