Apple Pay, App Store Under Antitrust Investigation By EU

Apple Inc.’s AAPL Apple Pay and App Store are under investigation in the EU on the suspicion of having broken European antitrust laws, this forming part of wider scrutiny into perceived U.S. tech firms’ market grabbing on the continent.

What Happened

If found guilty, Apple may have to pay as much as 10% of its annual revenue in fines and change the way it operates, reported the Wall Street Journal.

On Tuesday, the European Commission, the EU’s executive branch, said it would investigate how Apple allows its Apple Pay service to be the sole contactless payment service available on its devices.

Apple is also having to defend its practice of taking a cut in the revenues of the apps hosted on its App Store.

Apple expressed its disappointment saying, “The European Commission is advancing baseless complaints from a handful of companies who simply want a free ride, and don’t want to play by the same rules as everyone else.”

Why It Matters

A WSJ source revealed that the EU investigations are centered around Apple’s handling of music streaming apps such as Spotify, as well as game and cloud services apps.

EU Executive Vice President, Margrethe Vestager, said the case had urgency because the growth of mobile commerce has been “accelerated by the coronavirus crisis, with increasing online payments and contactless payments in stores.”

Other U.S. companies facing EU investigations include Alphabet Inc. GOOGL GOOG, Facebook Inc. FB and Amazon Inc. AMZN

Spotify Technology SA SPOT called the EU’s action “a good day for consumers.” Last year Spotify made an antitrust complaint to the EU.

Apple Price Action

Apple shares traded 0.19% higher at $352.75 in the after-hours session on Tuesday. The shares had closed the regular session 2.65% higher at $352.08.