EU accuses Apple of distorting competition with App Store policy

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The European Union supports Spotify’s complaint that Apple has created an unfair situation in the App Store. It specifically mentions the distribution of music streaming apps.

In an announcement, the European Commission says it has informed Apple that it considers Apple to have abused its dominant position in the distribution of apps to distort competition in the music streaming market. Two aspects are specifically mentioned in this regard.

Firstly, the European Commission takes issue with the fact that app developers are obliged to use Apple’s payment system in their apps. This means that developers have to give up 30 percent of their revenue to Apple, which forces them to pass on higher prices to consumers.

Secondly, Apple has a strict policy that within apps there must be no reference to payment systems other than Apple’s. This prevents users of iPhones and iPads from being informed of alternative and cheaper ways to pay.

No other way to get apps

The Commission further emphasises that Apple does have a dominant position in the market, even though Apple previously pointed to alternative app shops or the Internet as competitors. The Commission cannot agree with this, as the App Store is the only way for developers of music streaming apps to reach customers with iOS devices. Apple’s closed ecosystem prevents users from obtaining applications by other means.

According to the committee, users of iPhones and iPads are very loyal to Apple and will not easily switch to a device of another brand. Therefore, competition from other app stores does not apply. Because of all these factors, developers are forced to adhere to Apple’s mandatory and non-negotiable rules.

Apple Music

Apple’s requirements are one thing, but these strict requirements turn into distortion of competition as Apple also offers its own music streaming service: Apple Music. This service competes directly with other music services, while Apple does not have to pay any commission to itself.

“App stores play a central role in today’s digital economy”, says European Commissioner Margrethe Vestager. “We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers. By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition. This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”

No direct consequences

The EU ruling has no direct implications for Apple. It is merely a step in the overarching competition investigation into Apple’s App Store policies. A final ruling for that investigation will follow later, although no specific date has been set for that.

Tip: Apple kept iMessage away from Android on purpose