“Consumers are suffering.” European Competition Commissioner Margrethe Vestager said Apple had violated fair competition by restricting Spotify's commercial development, affecting users of the streaming service.
This is the first time Brussels has filed such accusations against Apple. If Spotify and Apple continue to go to court, the EU could potentially impose a fine of up to 10% of Apple's global sales. This is roughly $ 27 billion, although maximum fines for such proceedings are rarely imposed.
The restriction of competition was found in the rules of the Apple App Store. They suggest that app developers should use the payment system that Apple offers and do not allow users to be informed about other purchase options.
The European Competition Commissioner said these are clear signs that Apple's App Store rules are affecting the business of streaming platform developers and other app developers.
“App creators rely on the App Store to reach Apple's iPhone and iPad users. This is a significant market share, so access to the Apple App Store is key to the app developer's success,” she explained at a press conference.
“They want all the advantages of the App Store, but they do not think that they need to pay something for it,” – this is how Apple reacted to the decision of the EU regulator and complaints from developers
The charge of restricting competition to Apple was filed in 2019 by Spotify co-founder Daniel Eck, who said Apple was “limiting choice and stifling innovation.”
“Apple's regulations distort competition in the music streaming market by increasing the cost of producing various apps. This in turn leads to higher prices for consumers to subscribe to music in apps on iOS devices,” the EU agreed with Spotify.
In response, Apple said it received no commission from 99% of Spotify subscribers.
“At the heart of this case is Spotify's requirement that they should be able to advertise alternative billing offers on their iOS app. This is a practice that no store in the world allows. They want all the benefits of the App Store, but they don't think they have to pay something for it. The Commission's argument for Spotify is the opposite of fair competition, “the company said in a statement.
EU and US regulators are currently conducting other investigations into the Apple App Store, including the fairness of the 30% commission charged on app purchases.
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The developers call it the “Apple tax”.
Under pressure from developers and regulators, Apple has already cut commissions to 15% for any developer earning less than £ 1 million in revenue per year.
In March 2020, e-commerce company Rakuten filed a complaint with the European Commission alleging that it was uncompetitive to charge e-books sold through the App Store when promoting its own service, Apple Books. This case will be considered separately.
Epic Games, the creators of Fortnite, also filed a similar complaint about the 30% commission. This resulted in Apple removing the game from the App Store.
The lawsuit between the two begins in the US next week, promising to reveal many of Apple's secrets. Apple CEO Tim Cook and Epic CEO Tim Sweeney are expected to testify at the trial.
