European Commission Issue Antitrust Charges Against Apple Over App Store Practices
The European Commission is issuing antitrust charges against Apple over concerns regarding its App Store practices. The Commission found Apple in violation of EU competition rules with its App Store policies, following an initial complaint from Spotify back in 2019.
The Commission believes Apple has a “dominant position in the market for the distribution of music streaming apps through its App Store”. It specifically focuses on two rules that Apple imposes on developers; the mandatory use of Apple’s in-app purchase system, and a rule that forbids developers of informing users of other purchasing options outside their apps. Apple charges a 30 percent cut for its in-app purchases and the second rule benefits its app store.
The Commission findings show that the 30 percent commission fee often results in higher prices for consumers. The commission is often referred to as “Apple tax”. “Most streaming providers passed this fee on to end-users by raising prices,” according to the European Commission.
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The Executive Vice-President of the European Commission, Margrethe Vestager, also tweeted that Apple in breach of the antitrust law.
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’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,” the EU said in a statement.
The EU has also sent Apple a statement of objections which a list of how Apple is in violation of the rules. Apple has a chance to respond to the list of objections. The company also faces a fine of up to 10 percent of its annual revenue if it’s found guilty of breaking EU rules. This could be as high as $27 billion based on Apple’s annual revenue of $274.5 billion in 2020. Also, Apple would have to change its rules, potentially reducing its income in the long term.
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