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Our preliminary conclusion: Apple is in breach of EU competition law. Apple Music competes with other music streaming services. But Apple charges high commissions to App Store competitors and prohibits them from announcing alternative ordering options. Consumers are disappearing.
Margrethe Vestager, Vice-President of the European Commission on Europe for the Digital Age (Competition)
Case
The EU Commission is looking at two factors – the mandatory use of Apple’s own in-app purchasing mechanism for third-party music streaming applications, and the fact that app developers have no way of informing users about other purchasing options outside of apps.
Under EU competition law, these are anti-competitive practices, so the Commission has already issued a competition law to the company.
Apple’s immediate response
Of course, Apple gets a chance to address the allegations, but at this point, things don’t look particularly clear to Tim Cook and the company.
In response to the European Commission’s findings, Apple said:
“Spotify has become the world’s largest music subscription service and we are proud of our role. Spotify does not pay Apple commissions on more than 99% of their subscribers and only pays 15% on the remaining subscribers they have purchased from the App Store. At the heart of this case is Spotify’s demand that they should be able to advertise alternative offers on their iOS app, a practice that no store in the world allows, and once again they want all the benefits of the App Store but don’t think they should pay anything for it. the opposite of fair competition. “
In a music streaming discussion, Margrethe Vestager says:
With Apple Music Apple also competes with music streaming service providers. By imposing strict rules on the App Store that hamper competing music streaming services, Apple is depriving users of cheaper music streaming choices and distorting competition.
Consequences
If Apple is found guilty, the potential fines could be as high as $ 27 billion, or 10% of the company’s annual revenue. More importantly, a company is likely to have to change its “business mechanisms” if it is to continue to provide certain services in the EU.
Spotify lawyer Horacio Gutierrez welcomes the EU’s response, saying this is only the first (critical) step towards holding Apple accountable for anti-competitive behavior. He wants a level playing field for all app developers competing with Apple in their own App Store.
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