Two years after an initial complaint from Spotify, the European Commission has announced that it will be charging Apple with breaking EU competition laws.
In 2019, Spotify made a complaint about Apple’s App Store practices for streaming music. It accused the tech giant of using its dominant market position to stifle competition.
Now, the Commission says that it agrees with the accusation that Apple has a “dominant position in the market for the distribution of music streaming apps through its App Store”.
It also says that this has been damaging to online competition due to the two rules it required other developers to follow. These rules are:
- Developers are required to used Apple’s in-app purchase system. For this, Apple takes a 30% cut of any money made.
- Developers are not allowed to inform their customers of any alternative purchasing options outside of the app itself.
The European Commission said in its statement that these rules, particularly the 30% Apple is charging on purchases, have meant higher prices for consumers.
It said, “Most streaming providers passed this fee on to end-users by raising prices. Apple’s rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers. This, in turn, leads to higher prices for consumers for their in-app music subscriptions on iOS devices.”
What happens next?
This decision is an important first step, but it’s also part of a much longer process. Following the Commission’s initial finding, there will be formal antitrust proceedings against Apple.
Apple is yet to respond to the decision, but it has been given the opportunity to do so. If the company wants to appeal, it will need to send its objections in the next 12 weeks.
If it is found guilty of violating EU competition rules, it could face a fine of up to 10% of its annual revenue, which would be a total of $27 billion. Additionally, the tech giant would be required to change its App Store policies for developers going forward.
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