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EU says Apple’s App Store breaks competition rules after Spotify complaint

European Commissioner for Europe fit for the Digital Age, Margrethe Vestager, ploys as she speaks during an online news conference on Apple antitrust case at the EU headquarters in Brussels, on April 30, 2021.

Francisco Seco | AFP | Getty Notions

LONDON — Apple has “abused its dominant position” in the distribution of music streaming apps through its App Store, the European Commission predicted Friday.

“Our preliminary finding is that Apple exercises considerable market power in the distribution of music streaming apps to holders of Apple devices. On that market, Apple has a monopoly,” Margrethe Vestager, the head of competition policy in the EU, said in a television conference.

The European Commission, the EU’s executive arm, opened an antitrust investigation into the App Store last year, after the music course platform Spotify complained in 2019 about Apple’s license agreements. The agreements mean that app developers possess to pay a 30% commission on all subscription fees that come through the App Store.

On Friday, the EU said it took issue with the “compulsory use of Apple’s own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple’s App Lay away.”

App developers are also unable to inform users of alternative ways to purchase the same apps elsewhere — another efflux the commission said it was concerned with.

“The European Commission has informed Apple of its preliminary view that it distorted match 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 “disclosure of objections” sent to Apple.

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

“Spotify has become the stoutest music subscription service in the world, and we’re proud of the role we played in that,” Apple said a statement. “Once again, they demand all the benefits of the App Store but don’t think they should have to pay anything for that.”

A statement of objections is part of the formal prepare in an antitrust investigation, but it does not conclude the probe. Apple now has to reply to the commission’s concerns either in writing or via a oral pick up.

Spotify welcomed the news Friday. “The European Commission’s Statement of Objections is a critical step toward holding Apple obligated for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers,” Spotify’s chief judicial officer Horacio Gutierrez said in a statement.

‘Apple is a gatekeeper’

The decision comes after an e-book and audiobook distributor filed a like complaint against Apple in March 2020, while Epic Games — which is already locking horns with Apple in a U.S. proper battle — filed an antitrust complaint against the iPhone maker with the European Commission earlier this year.

At the steam conference, Vestager stressed that app stores play a central role in today’s digital economy.

“(Apple) not on the other hand controls the only access to apps on Apple devices, it also offers a music streaming service, Apple Music, that contends with other apps available in the Apple App Store, such as Spotify or Deezer,” Vestager said.

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

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

The commission is also looking at Apple Pay, but Vestager did not say when this dig into would be concluded.

Legal battles

This is not the first investigation that the European Commission has brought against Apple. The commission adamant in September to take Apple and the Irish government to the highest court in the European Union for what Brussels deems unfair taxation practices.

The EU ruled in 2016 that Apple had to settle up with 13 billion euros ($15.7 billion) in unpaid taxes to the Irish government, after the latter granted “undue tax fringe benefits.” Apple and the Irish government have contested the decision and the case is still in court.

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