Associated PressMay 3, 2021 13:49:33 IST
European regulators accused Apple on Friday of violating the bloc’s competition laws, claiming the iPhone maker distorted music streaming competition by imposing unfair rules on rival services in the App Store. The EU executive said it was opposed to Apple’s rules on music streaming services competing with its Apple Music service, saying they would ultimately cost consumers more and limit their choices.
The charges highlight a long-running dispute over app payments between Apple and the popular music streaming service Spotify, which filed a complaint that launched an investigation – one in four companies is facing the EU. Brussels regulators are also investigating other major U.S. technology companies, such as Amazon and Google, in the midst of a growing global movement to curb power.
EU Competition Commissioner Margrethe Vestager raised two main concerns. One focuses on Apple’s practice of forcing application developers selling digital content to use their internal payment system, which charges a 30 percent commission on all subscriptions.
Another concern is that Apple is preventing app makers from telling users about cheaper ways to pay for orders that don’t involve going through the app.
Apple dismissed the allegations, saying it was proud of its role in helping Spotify grow into a music streaming giant. The company also pointed out that Spotify does not pay Apple fees for 99 percent of its paid subscribers.
“Once again, they want all the benefits of the App Store, but don’t think they should have to pay anything for it,” Apple said in a statement. “The Commission’s argument in favor of Spotify is the opposite of fair competition.”
Vestager said that while Spotify had grown despite the restrictions, they harmed the business of small music streaming players like Deezer and Soundcloud.
The rules in the App Store are a problem not only for music streaming services, as many other app makers depend on it as a “gatekeeper” for the iPhone and iPad, Vestager said.
Vestager noted that Apple Music is not subject to the same rules, which harms competitors by raising their costs, reducing their profit margins and making them less attractive in the App Store. According to him, the problem is not the payment itself, but the fact that Apple only charges it for payments for digital content, not for other services such as transportation or food delivery. According to an EU study, it generally raised the price of a monthly subscription to € 12.99 ($ 15.70) from € 9.99, he said.
Spotify refuses to use Apple’s app payment system to sell premium subscriptions and requires customers to visit its website. Epic Games, which makes the popular video game Fortnite, has also filed an EU competition complaint against Apple. When Apple tried to bypass the App Store with its own payment system, Apple kicked the Fortnite app.
Apple’s ban on communicating with customers means app makers can’t get the same insights from their users as Apple, as a reason to cancel an order, Vestager said.
“They just don’t get to mention their websites or links to them in their own apps,” Vestager said. “They are also not allowed to send emails to users who have created an account in the app to inform them of cheaper options.”
Apple has 12 weeks to respond to EU protests. Under EU competition law, companies could offer remedies – Vestager said it thinks “Apple should stop the infringement” and not do anything that would have the same effect. Or else companies can be fined up to 10 percent of their annual revenue for violations. For Apple, which had revenue of $ 274.5 billion in the last fiscal year, it could impose a fine of up to $ 27.4 billion.
Spotify welcomed the EU’s action. It is “a critical step towards holding Apple accountable for its anti-competitive behavior, ensuring meaningful choices for all consumers and a level playing field for application developers,” company lawyer Horatio Gutierrez said in a statement.