EU regulators on Friday accused Apple of distorting competition in the music streaming market and faced Spotify in a case that could result in a hefty fine and changes in the iPhone maker’s lucrative business practices.
The tech giant is accused of “abusing its dominant position” by getting music app developers to use Apple’s in-app purchase system to distribute their services.
App developers must pay Apple a 30% commission for all subscriptions made through the App Store under their license agreement.
The EU’s preliminary results mark the first time Brussels has brought anticompetitive charges against Apple despite both sides bruising in the past, particularly a multi-billion dollar tax dispute with Ireland.
Apple, Spotify, and other parties can now respond. If the case continues, the EU could seek concessions and potentially fine up to 10% of Apple’s global sales – up to $ 27 billion, though it rarely imposes the maximum fine.
EU regulators on Friday accused Apple of distorting competition in the music streaming market and faced Spotify in a case that could result in a hefty fine and changes in the iPhone maker’s lucrative business practices
Apple found itself in the crosshairs of the European Commission after Swedish company Spotify complained two years ago that the US tech giant wrongly limited its rivals to its own music streaming service Apple Music on iPhones.
The EU Competition Ombudsman stated in what is known as his statement of objection, which sets out the indictment, the problem related to Apple’s restrictive rules for its app store, which force developers to use their own in-app payment system and they are attached to it To prevent users from notifying users of other purchase options.
EU Competition Commissioner Margrethe Vestager said there are clear indications that Apple’s App Store rules are having a greater impact on the business development of music streaming competitors and app developers.
‘You (app developer) rely on the Apple App Store as a gatekeeper to access users of Apple iPhones and iPads. This significant market power cannot go unchecked as the conditions for accessing the Apple App Store are critical to the success of app developers, ”she said at a press conference.
According to Vestager, Apple should end restrictive practices and not do anything that would replicate them.
She also said other authorities are investigating the problem.
“We have contact with other jurisdictions handling similar cases, namely the Dutch, Australians and Americans,” she said, adding that she was also interested in the app gaming market, even though it was very early on .
EU Competition Commissioner Margrethe Vestager said there are clear indications that Apple’s App Store rules are having a greater impact on business performance of rivals in streaming music and app developers
Apple dismissed the EU charges.
“Spotify has grown to be the largest music subscription service in the world and we are proud of the role we have played in it,” said a statement.
‘They want all the benefits of the App Store but don’t think they have to pay for it. The Commission’s argument on behalf of Spotify is the opposite of fair competition, ”she added.
Spotify welcomed the EU’s move, describing it as “a critical step in bringing Apple to account for its anti-competitive behavior, ensuring sensible choice for all consumers and a level playing field for app developers”.
One of Europe’s few global consumer technology success stories, Spotify is the market leader in music streaming with 356 million active users and 158 million paid subscribers.
Apple Music, which was recently launched in 2015, is estimated to have more than 70 million subscribers, though the company doesn’t provide a separate number for this part of its business.
Apple found itself in the crosshairs of the European Commission after Swedish company Spotify complained two years ago that the US tech giant wrongly limited its rivals to its own music streaming service Apple Music on iPhones
Competition between the two companies has increased in the past few weeks, and both are trying to grow their customer base by dominating the podcast market.
“Europe’s consumers expect and deserve access to a full range of music streaming services without reducing their choice or unduly increasing prices from internet gatekeepers,” said European consumer organization BEUC.
The EU indictment comes a week before Apple’s clash with Epic Games in US antitrust proceedings following a lawsuit by Fortnite creators alleging that Apple abused its dominance in the mobile app market.
Epic has complained to the commission on the same issues.
Last month, the UK’s competition and market regulator opened an investigation into Apple after complaints about the iPhone maker’s conditions for app developers were unfair.