The European Union EU has accused American multinational technology company – Apple of breaking European laws.
According to the EU, Apple engaged in unfair financial practices that disadvantaged music-streaming developers it competes with.
The practice uncovered by preliminary findings revealed that apple charged music-streaming developers commission on in-app payments and blocked them from showcasing alternative ways to subscribe outside the App Store.
To place an app in the App Store, developers must agree to use Apple’s payment system for in-app purchases, which automatically takes a 15% to 30% cut.
The findings are the result of an investigation the European Commission launched in June, prompted by the music-streaming giant Spotify lodging an official complaint against Apple in March 2019.
Spotify said that by forcing developers to pay a commission on in-app payments, like a Spotify subscription, Apple artificially inflated prices while simultaneously competing with Spotify through Apple Music.
Releasing findings of the investigation, Margrethe Vestager, the EU antitrust chief issued a statement on Twitter which reads:
“Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store,” Margrethe Vestager, the EU antitrust chief, said in a statement.
“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.”
Though this preliminary finding focuses on music-streaming apps, it could have broader implications for Apple. Other major developers have accused Apple of monopoly abuse with its in-app-purchase tax, and the tech giant is due to appear in court next week with Epic Games, the maker of “Fortnite.”
Vestager indicated during a news conference on Friday that if Apple were found guilty of breaking competition law, it could pave the way for consumers or rivals to bring private cases.
The development spells doom for Apple which risks paying 10% of its annual revenue as fine if found quilty or compelled to adhere to a court order demanding change in the business practice.
Vestager has previously hit US tech giants with big antitrust fines. In 2018, she fined Google a record-breaking $5 billion after accusing it of abusing the dominance of its Android platform.
When contacted to respond to the findings, Apple spokesperson said: “Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store.
“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. 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.”
