Tuesday, July 16, 2024

EU opens Apple antitrust investigations into App Store and Apple Pay practices

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The European Commission is opening two antitrust investigations into Apple’s App Store and Apple Pay practices today.

The first investigation will probe whether Apple has broken EU competition rules with its App Store policies, following complaints by Spotify and Rakuten over Apple’s 30 percent cut on subscriptions and sales of ebooks through its App Store.

“We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers, for example with its music streaming service Apple Music or with Apple Books,” says Margrethe Vestager, the head of the EU’s antitrust division. “I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”

Spotify led the complaints into Apple’s App Store policies

Spotify has claimed Apple uses its App Store to stifle innovation and limit consumer choice in favor of its own Apple Music service. Rakuten filed a similar complaint to the EU earlier this year, alleging that it’s anti-competitive for Apple to take a 30 percent commission on ebooks sold through the App Store while promoting its own Apple Books service.

Alongside the App Store investigation, the European Commission will also look at Apple Pay to assess whether Apple’s payment system violates EU competition rules. Apple has limited access to the Near Field Communication (NFC) functionality of its iPhone and Apple Watch devices, a move that means banks and other financial service providers can’t offer NFC payments through their own apps.

Vestager points to an increase in mobile payments in Europe, due to the ongoing coronavirus pandemic, as motivation for its Apple Pay investigation. “It appears that Apple sets the conditions on how Apple Pay should be used in merchants’ apps and websites,” says Vestager. “It also reserves the ‘tap and go’ functionality of iPhones to Apple Pay. It is important that Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices.”

The investigation into Apple Pay comes months after German lawmakers voted in favor of legislation that could force Apple to allow other companies to access its phone’s NFC chips. Apple was left surprised by the draft legislation, claiming that the move “could be harmful to user friendliness, data protection, and the security of financial information.”

Both formal antitrust investigations will begin today, with the Commission promising to carry out in-depth investigations “as a matter of priority.” The investigations come just a day after Apple touted the findings of a new study that says the App Store was responsible for $519 billion in estimated total billings and sales of both physical products and services and digital goods in 2019.

“It’s disappointing 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,” says an Apple spokesperson in a statement to The Verge. “We don’t think that’s right — we want to maintain a level playing field where anyone with determination and a great idea can succeed.”

Apple now says it welcomes the opportunity to prove to the European Commission it has a simple goal in mind. “At the end of the day, our goal is simple: for our customers to have access to the best app or service of their choice, in a safe and secure environment. We welcome the opportunity to show the European Commission all we’ve done to make that goal a reality.”

Spotify described the investigation as a “good day” for consumers, Spotify, and developers in a statement to The Verge. “We welcome the European Commission’s decision to formally investigate Apple, and hope they’ll act with urgency to ensure fair competition on the iOS platform for all participants in the digital economy.”

Update, June 16th 7:50AM ET: Updated with statements from Apple and Spotify.

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