The European Union regulatory authority has finally charged Apple on Spotify’s complaint filed two years ago. In its charge sheet, the EU commission finds Apple in violation of its antitrust laws by implementing stifling App Store payment rules. In the list of objections, the Cupertino tech giant is accused of charging a high 30% commission rate for all in-app purchases to disadvantage third-party music streaming apps, of failing to notify users of alternative payment methods, and other violations. If found guilty, the Cupertino tech giant would pay a $27 billion fine.
Earlier this month, it was reported that the EU Commission had finalized its charge sheet against Apple on Spotify’s complaint and will send it to the company in a week’s time. In 2019, the Swedish music streaming service ‘Spotify’ accused Apple of using App Store rules to regulate competing apps. In its filing to the EU, the Swedish company complained that due to App Store’s 30% commission rate, it was bound to increase subscription prices which is unfair to the consumers.
Reiterating allegations levied by Spotify, EU’s statement says that “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.” In addition, at a press conference in Brussels, EU Competition Commissioner Margrethe Vestager said that “Apple’s significant market power cannot go unchecked as a key gatekeeper for apps”.
@Vestrger tweet on the commission preliminary conclusion was received with mixed responses, while come hauled the commission for regulatory tech giants like Apple, some were quick to point out the 30% commission is the industry-standard rate which is charged by Google and other companies.
Our preliminary conclusion: @Apple is in breach of EU competition law. @AppleMusic compete with other music streaming services. But @Apple charges high commission fees on rivals in the App store & forbids them to inform of alternative subscription options. Consumers losing out.
— Margrethe Vestager (@vestager) April 30, 2021
Apple responds to fresh European Union regulatory commission antitrust allegations
The Cupertino tech giant’s response statement reads:
“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store.
At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”
After reviewing the sent list of objections, the iPhone maker will have to chance to defend its App Store rules and practices. If Apple is found guilty of violating EU antitrust rules, it would have to pay up to 10 percent of its annual revenue as a fine, which approximately amounts to $27 billion. The company will also be required to change its App Store payment structure.
Last year, when the heat was on Apple for not only taking a 30% share cut but more importantly, at the time when the whole world was gripped in a health crisis. As a pre-emptive measure, the Cupertino tech company introduced a new App Store program for small developers which reduced the commission rate to 15% for app developers who earned equal to or less than $1 million per year. A study revealed that the new program covered 98% of developers and only 2% of big tech companies were charged a 30% commission rate.