The European Commission has ruled that Apple has breached EU competition rules over the way it runs its App Store for music streaming rivals.
Two years ago, Spotify made a formal complaint and claimed that Apple was hindering the development of the music streaming market.
In its findings, the European Commission said that it takes issue with the mandatory use of Apple's own in-app purchase mechanism imposed on music streaming developers to distribute their apps via Apple's App Store. The Commission is also concerned that Apple applies certain restrictions on app developers preventing them from informing iPhone and iPad users of alternative, cheaper purchasing possibilities.
Apple faces a fine and could be forced to change its approach if the tech giant is unable to convince EU regulators otherwise.
In a series of investigations, EU and US antitrust regulators are probing Apple's App Store and considering whether the 30% commission it charges for in-app purchases is fair.
The charge against Apple was filed in 2019 by CEO and co-founder of Spotify Daniel Ek, who said that Apple was "limiting choice and stifling innovation".
"The Commission's preliminary view is that Apple's rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers,” said today’s EC statement. “This in turn leads to higher prices for consumers for their in-app music subscriptions on iOS devices. In addition, Apple becomes the intermediary for all IAP [in-app purchase] transactions and takes over the billing relationship, as well as related communications for competitors.”
Reacting to the EC ruling, Spotify’s head of global affairs and chief legal officer Horacio Gutierrez said: “Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications. The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anti-competitive behaviour, ensuring meaningful choice for all consumers and a level playing field for app developers.”
The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anti-competitive behaviour
Horacio Gutierrez
Alexander Holland, chief content and strategy officer at Deezer, said: "We applaud the Commission’s findings today. It’s an important step towards a fair competitive landscape where dominant market players like Apple have to compete with independent companies like Deezer on quality of service, innovation and consumer experience, rather than artificially created barriers and a lack of a level playing field.
“We work closely with Apple, and Deezer is one of the many entertainment companies that help Apple’s ecosystem with its diversity and consumer choice. Hopefully, today’s statement is the first step on a road towards a better competitive landscape for digital services. Consumers benefit from fair competition through better and more diverse offers, features and content. While this is only the first step on a longer journey, we are happy that the Commission is acting in the interests of healthy European competition."
EC executive vice-president Margrethe Vestager, in charge of competition policy, said: “App stores play a central role in today's digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers.
“By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition. This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”
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 said it did not receive any commission on 99% of Spotify's subscribers.
"At the core of this case is Spotify's demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows," it said in 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 Commission's argument on Spotify's behalf is the opposite of fair competition."
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