E.U. says Apple’s App Store breaks competition rules after Spotify complaint

LONDON — Apple has “abused its dominant position” within the distribution of music streaming apps by its App Store, the European Commission stated Friday.

“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 pinnacle of competition coverage within the E.U., stated in a press convention.

The European Commission, the EU’s government arm, opened an antitrust investigation into the App Store final yr, after the music streaming platform Spotify complained in 2019 about Apple’s license agreements. These imply that app builders should pay a 30 % fee on all subscription charges that come by the App Store.

On Friday, the E.U. stated it took difficulty with 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.”

App builders are additionally unable to tell customers of different methods to buy the identical apps elsewhere — one other difficulty the Commission stated it was involved with.

“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” despatched to Apple.

In response, Apple stated the E.U.’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 stated an announcement. “Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that.”

An announcement of objections is a part of the formal course of in an antitrust investigation, however it doesn’t conclude the probe. Apple now has to answer to the Commission’s considerations both in writing or through a oral listening to.

Spotify welcomed the information 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 stated in an announcement.

‘Apple is a gatekeeper’

It comes after an e-book and audiobook distributor filed an analogous complaint in opposition to Apple March 2020, whereas Epic Games — which is already locking horns with Apple in a U.S. legal battle — filed an antitrust complaint in opposition to the iPhone maker with the European Commission earlier this yr.

At the press convention, Vestager harassed that app shops play a central function in right this moment’s digital economic system.

″(Apple) not solely controls the one entry to apps on Apple gadgets, it additionally presents a music streaming service, Apple Music, that competes with different apps obtainable within the Apple App Store, comparable to Spotify or Deezer,” Vestager stated.

She added that App Store rules are a priority for a lot of app builders, “because they depend on Apple App Store as a gatekeeper to access users of Apple’s iPhones and iPads.”

“This significant market power cannot go unchecked as the conditions of access to the Apple App Store are key for the success of app developers,” Vestager stated.

The Commission can also be taking a look at Apple Pay, however Vestager didn’t say when this probe could be concluded.

Legal battles

This just isn’t the primary investigation that the European Commission has introduced in opposition to Apple. The commission decided in September to take Apple and the Irish authorities to the very best court docket within the European Union for what Brussels deems unfair taxation practices.

The E.U. dominated in 2016 that Apple needed to repay 13 billion euros ($15.7 billion) in unpaid taxes to the Irish authorities, after the latter granted “undue tax benefits.” Apple and the Irish government have contested the decision and the case continues to be in court docket.

Hoping to beat lengthy authorized battles and make its markets fairer, the European Union is engaged on new regulation that might finally impression most of the U.S. tech giants.

The Digital Markets Act is prone to finish what’s often known as self-preferencing — when, for example, app search leads to an Apple product prioritize these developed by the tech large. The concept is to offer smaller app builders the identical likelihood of being discovered and chosen by shoppers.

The laws continues to be being mentioned by European lawmakers. But, aside from imposing sensible modifications, it is going to even have the ability to high-quality corporations as much as 10 % of their worldwide annual turnover.

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