Apple Hit With EU Antitrust Investigations

The European Commission announced separate antitrust probes into the business practices of Apple’s App Store and Apple Pay on Tuesday.

Leading the charge is Margrethe Vestager, the European Commissioner for Competition, who believes Apple has assumed too powerful a position within the mobile marketplace.

“It appears that Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple’s popular devices,” Vestager said in a statement.

“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,” she added. “I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”  

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The investigation into Apple Pay concerns the terms, conditions and other measures for integrating the service in merchant apps and Web sites on iPhones and iPads, as well as Apple’s limitation of access to the Near Field Communication functionality (“tap and go”) on iPhones for payments in stores, and alleged refusals of access to Apple Pay.

“It appears that Apple sets the conditions on how Apple Pay should be used in merchants’ apps and websites,” Vestager stated. “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.”

Apple on Tuesday dismissed the probes as groundless.

“It’s disappointing the European Commission is advancing baseless complaints from a handful of companies that simply want a free ride, and don't want to play by the same rules as everyone else,” the company stated.

Although not mentioned by name, Apple was almost certainly referring to Spotify, which has been petitioning regulators to take a closer look at Apple’s operations for years.

“In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience -- essentially acting as both a player and referee to deliberately disadvantage other app developers,” Spotify CEO Daniel Ek said last year.

At the time, Ek took particular issue with a 30% “tax” that Apple levied on Spotify and other digital services.

In its defense, Apple has argued its platforms are partially responsible for popularizing services like Spotify. The tech titan has also pointed out its revenue sharing agreements drop from a 30% cut to a 15% cut after a year.

Earlier this week, a report from consulting firm Analysis Group estimated the App Store generated $519 billion in total billings and sales of products and services in 2019.

During the same period, Apple said digital items -- from mobile games to in-app purchases to paid apps -- produced $61 billion.

 

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