Apple hit with landmark antitrust expenses in Europe over App Retailer practices

Apple has been accused of abusing its dominant position in the music streaming market by imposing restrictive rules on the App Store. This is a milestone for the regulators of the European Union.

The charges follow a 2019 complaint from the music streaming platform Spotify and provide for a maximum fine of up to 10% of Apple’s annual global revenue – which could amount to a multi-billion dollar fine.

This is the first time Apple AAPL has faced antitrust charges with -1.51% in the 27-strong bloc. The move represents one of several regulatory pressures on Apple worldwide that could lead to a change in the technology giant’s business model.

“By setting tough rules for the App Store that penalize competing music streaming services, Apple is depriving users of cheaper music streaming options and distorting competition,” said Margrethe Vestager, European Union director for competition and digital policy. on Friday.

“It does this by charging competitors high commission fees for every transaction in the App Store and by banning their customers from notifying their customers of alternative subscription options,” added Vestager.

Also read: Apple slapped antitrust complaints in Germany because of new iPhone data protection settings

According to Vestager, the preliminary finding from regulators is that the tech giant is a gatekeeper for users of iPhones and iPads through its App Store, and they noted that Apple is competing with music streaming providers like Spotify through Apple Music.

Apple will have the ability to respond to the indictment before a final enforcement decision and may make regulatory concessions to avoid fines.

Spotify SPOT, -3.83% said in March 2019 that Apple had abused its control over which apps are displayed in the App Store to limit competition with its own Apple Music service. Spotify also said that Apple’s payment mechanism, which enables in-app and app store purchases to be reduced by up to 30%, made it difficult for Apple Music competitors to self-market.

The EU regulators later opened antitrust investigations against Apple in June 2020 and investigated the App Store and Apple Pay, its mobile payment system.

Basic reading: Facebook, Google, Apple and Amazon could expect fines of billions of dollars due to the new EU technology regulations

In a statement, Apple accused the European Commission regulators of arguing on behalf of Spotify.

“Spotify has grown to be the largest music subscription service in the world, and we’re proud of the role we’ve played in it. Spotify pays Apple no commission for over 99% of its subscribers and only pays 15% commission for the remaining subscribers they have purchased through the App Store, “said an Apple spokesman.

“At the heart of this case is Spotify’s request to promote alternative offerings for their iOS app, a practice that does not allow any business in the world,” added the spokesman. “They want to take full advantage of the App Store again, but don’t think they’ll have to pay for it. The Commission’s argument on behalf of Spotify is the opposite of fair competition. “

The charges against Apple in the EU are being brought as the company and its colleagues at Big Tech face increasing pressure from antitrust authorities worldwide.

Next week Apple will take part in US antitrust proceedings against the developer of the video game “Fortnite”. Epic Games claims Apple abused its position in the mobile apps market and filed a similar complaint with EU regulators.

Plus: How Fortnite maker Epic Games will try to prove that Apple operates the App Store as an illegal monopoly

And: Apple v. Epic: What to Expect in a Process that Could Change Antitrust Law and the Mobile App Ecosystem

In the UK, the competition and market regulator announced in March that it was investigating Apple for alleged violations of competition rules in the App Store in a similar case to the EU.

And on Monday, a group of the largest and most powerful media and advertising companies in Germany filed an antitrust complaint against Apple with the country’s competition authority for changes to the data protection settings for the iPhone.

In a broader sense, Apple and the online retailer Amazon AMZN are -0.11%.,
Social media platform Facebook FB, -1.34%,
and tech giant Google, owned by Alphabet togetL, -1.64%,
will be covered by the Law on Digital Services and Digital Markets, presented by the European Commission in December 2020 and pending approval by the European Parliament and the Council of Ministers. These laws aim to keep the technical platforms at a high standard in terms of the content they host and to introduce new competitive measures for online markets.

Spotify did not immediately respond to a request for comment.

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