Formal antitrust investigations have been announced by EU regulators into Apple’s App Store and Apple Pay system, following complaints by Spotify and Rakuten.
EU regulators will conduct an antitrust investigations into the Apple App Store and Apple Pay system following complaints from music streaming company Spotify and video streaming firm Rakuten.
First antitrust investigation
The first investigation will delve into the streaming companies’ claim that Apple is violating EU competition rules by requiring the use of its in-app purchase system to access music and books.
They added that Apple is also preventing apps from informing users about cheaper alternatives to purchase these content outside the App Store.
Currently, Apple gets a 30% commission on all digital content sales through its in-app system.
According to EU officials, they are concerned that Apple's practices may harm consumers by preventing them from benefiting from greater choice and lower prices. They conducted a preliminary probe and found that the competitors have passed on its fees to customers by raising prices, or disabled the in-app purchase systems entirely.
Margrethe Vestager, the European Commission's top antitrust official, said that Apple appears to have a "gatekeeper" role when it comes to the distribution of apps and content to iPhone and iPad users.
Vestager explained: "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."
In its March 2019 complaint, Spotify claimed that Apple’s competitors are placed at an unfair disadvantage by requiring them to pay the 30% commission while Apple Music doesn’t have to pay any fees.
Spotify also argued that publishers cannot inform users within their apps that the same items can be purchased elsewhere, including the service's own website.
Rakuten filed a similar complaint last March, pointing out that Apple is engaging in anti-competitive behavior when it takes a 30% commission on ebooks and audiobooks via the App Store while offering its own ebook service.
Second antitrust investigation
The second probe will focus on the impact of Apple's conduct on competition in mobile payments via its Apple Pay system.
According to the European Commission, it was concerned that Apple Pay's terms and conditions for buying goods and services on apps and websites on Apple devices "may distort competition and reduce choice and innovation."
The commission also said that Apple may be limiting access to its "tap and go" functionality on iPhones for payments in stores, and may be denying competitors access to Apple Pay.
It said that alternative payment systems may not be able to make the near field communication (NFC) chips in Apple's products which work with contactless payment terminals.
Vestager said: "It is important that Apple's measures do not deny consumers the benefit of new payment technologies, including better choice, quality, innovation and competitive prices."
Apple's response
In response to the investigations, Apple said it was "disappointing" to see the Commission advance "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."
An Apple spokesperson said "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."
