Apple has been charged with abusing its dominant position in the music-streaming market by imposing restrictive rules on the App Store, in a landmark move by European Union regulators.
The charges follow a 2019 complaint from music streaming platform Spotify, and carry a maximum penalty of up to 10% of Apple’s global annual turnover — what could amount to a multibillion-dollar fine.
This is the first time Apple
has faced antitrust charges in the 27-member bloc, and the action represents one of a number of regulatory pressures on Apple globally that could lead to a change in the technology giant’s business model.
“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,” said Margrethe Vestager, the European Union’s head of both competition and digital policy, on Friday.
“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,” Vestager added.
Vestager said that regulators’ preliminary finding is that the tech giant, via its App Store, is a gatekeeper to users of iPhones and iPads, and she noted that Apple competes with music-streaming providers — like Spotify — through Apple Music.
Apple will have the opportunity to respond to the charges before a final decision on enforcement, and may be able to offer regulatory concessions to avoid fines.
alleged in March 2019 that Apple abused its control over which apps appear in the App Store to restrict competition against its own Apple Music service. Spotify also said that Apple’s payment mechanism, which takes up to a 30% cut of in-app and App Store purchases, made it difficult for Apple Music rivals to market themselves.
EU regulators later opened antitrust probes into Apple in June 2020, investigating the App Store as well as Apple Pay, its mobile-payments system.
In a statement, Apple accused the European Commission regulators of arguing on Spotify’s behalf.
“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,” said an Apple spokesperson.
“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 spokesperson added. “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.”
The charges slapped against Apple in the EU come as the company, as well as its peers in Big Tech, face increasing pressure from antitrust regulators globally.
Next week, Apple will face off against the developer of videogame “Fortnite” in a U.S. antitrust case. Epic Games alleges that Apple has abused its position in the mobile app market, and has made a similar complaint to EU regulators.
In the U.K., the Competition and Markets Authority said in March that it was looking into Apple for suspected breaches of competition rules on the App Store, in a similar case to the one in the EU.
And on Monday, a group of Germany’s largest and most powerful media and advertising companies filed an antitrust complaint against Apple with the country’s competition regulator over changes to iPhone privacy settings.
More broadly, Apple, as well as online retailer Amazon
social-media platform Facebook
and tech giant Google, owned by Alphabet
will fall under the Digital Services Act and Digital Markets Act, presented by the European Commission in December 2020 and pending approval by the European Parliament and Council of Ministers. These acts aim to hold tech platforms to a high standard over the content they host, and introduce new procompetition measures for online markets.
Spotify didn’t immediately respond to a request for comment.