Apple is under investigation by European Union’s antitrust regulators over how the company operates the iOS App Store and Apple Pay. The commission says that the restrictions and conditions put forward by Apple may be twisting the company’s competition in many ways.
The commission confirmed that it is officially looking into Apple’s practices of distribution of applications from the App Store and whether or not it violates EU competition rules and regulations. It will also focus on the developer’s ability to inform users about cheaper alternatives for the app.
In March 2019, Spotify filed a complaint against Apple for antitrust. It was against Apple’s 30% tariff for accepting payments on the App Store. Spotify accused Apple of impeding the company’s sales by applying arbitrary rules.
Other than Spotify, there was a similar antitrust complaint about the company’s Application Store’s rules and its impacts from an undisclosed e-book/audiobook distributor. Tile, a company well known for its key trackers, also complained about Apple’s anticompetitive behavior to the European Commission in May 2020.
The Press release on the antitrust investigation states that two specific restrictions imposed by Apple will be investigated, namely:
(i) The mandatory use of Apple’s own proprietary in-app purchase system “IAP” for the distribution of paid digital content. Apple charges app developers a 30% commission on all subscription fees through IAP.
(ii) Restrictions on the ability of developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to consume content such as music, e-books, and audiobooks purchased elsewhere (e.g. on the website of the app developer) also in the app, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper.
Commission EVP, Margrethe Vestager says that Apple obtained a ‘gatekeeper’ role for the distribution of Applications to users on its devices. He stated:
“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. I have decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”
Apple Pay under Antitrust investigation
Another formal probe is underway, focusing on how the company operates its payments and all the ‘terms, conditions, and other measures’ that are applied with it.
The investigating team will also probe the imposed restrictions of access to Apple pay by competitors’ products on iOS, iPadOS, and other devices.
Apple’s comments on the antitrust investigations
Apple claims that these complaints are baseless. The company then decided to throw shade at these complaints by commenting that these companies are after a ‘free ride’ and that they ‘don’t want to play by the same rules’. Here is what Apple had to say:
“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. 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.
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.”
The Commission says that the investigation will be carried out as a priority. However, there is no timeframe for how long the process might take. EU antitrust probes can take a number of years to reach a final decision.