EU Charges Apple With App Store Antitrust Violations

Apple Inc. AAPL has been accused of anti-competitive practices in its music streaming business by European Union regulators acting upon a complaint filed by rival Spotify Technology SPOT.

What Happened: The European Commission, the EU’s executive branch, commenced an antitrust probe of Apple’s App Store last year in response to a 2019 complaint from the Swedish-headquartered Spotify regarding Apple’s licensing agreements.

Spotify’s complaint focused on two Apple policies: the mandatory use of Apple’s in-app purchase system, where the company charges a 30% commission, and a rule preventing app developers from informing users about additional purchasing options outside of apps.

“Our preliminary finding is that Apple exercises considerable market power in the distribution of music streaming apps to owners of Apple devices,” said Margrethe Vestager, the EU’s head of competition policy, during a press conference at the organization’s headquarters in Brussels Friday morning. “On that market, Apple has a monopoly.”

Vestager later tweeted out: “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.”

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What Happened Next: Apple issued a statement that rejected the commission’s findings as being “the opposite of fair competition.”

"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,” the company said in its statement. “Once again, they want all the benefits of the App Store but don't think they should have to pay anything for that.”

Apple has up to 12 weeks to respond to the Commission's charges. If found guilty of violating EU rules, the company faces a fine of up to 10% of its annual revenue – the company had $274.5 billion in annual revenue in 2020, which could put its fine as high as $27 billion.

And Apple may have additional problems with the Commission, as Vestager stated her office has taken "an interest in the gaming app market. That's really early days when it comes to that."

(Photo by Parampreet Chanana/Pixabay.)