The European Commission informed Apple on Friday 30 April of its preliminary view that the company distorted competition in the music streaming market by abusing its dominant position in the distribution of music streaming apps through its App Store.
The Commission takes issue with the requirement for developers to use Apple’s own integrated purchasing mechanism to distribute their music streaming app via the App Store. It is also concerned that Apple is placing restrictions on developers from informing iPhone and iPad users of other, cheaper purchase options.
The statement of objections covers the application of these rules to all music streaming apps that compete with Apple’s Apple Music app in the European Economic Area (EEA). It follows a complaint filed by Spotify.
Margrethe Vestager, Executive Vice-President responsible for Competition Policy, told the press: “Our preliminary finding is that Apple exercises considerable market power in the distribution of music streaming apps to owners of Apple devices. On that market, Apple has a monopoly. The company not only controls the only access to apps on Apple devices. It also offers a music streaming service, Apple Music, that competes with other apps available in the Apple App Store, such as Spotify or Deezer”.
The Commission’s concerns relate to the combination of the following two rules:
- the mandatory use of Apple’s proprietary ‘IAP’ integrated purchasing system for the distribution of paid digital content (30% commission on all subscriptions taken out): “Our investigation showed that this fee was passed on to end users by raising prices, typically from 9.99 to 12.99 euros”, Vestager said.
- anti-steering provisions, which limit the ability of app developers to inform users of alternative purchase options outside of apps: the Commission is concerned that users of Apple devices pay significantly higher prices for their subscription music services or that they are prevented from buying certain subscriptions directly in their apps. “Customers can download the Spotify app from the Apple App Store, but they cannot purchase a subscription to Spotify's premium service in the app”, Vestager said.
“Our concern is that Apple distorts competition in the music streaming market to the benefit of its own music streaming service, Apple Music. We are concerned that Apple’s rules negatively impact its rivals by raising their costs and reducing their profit margins as well as their attractiveness on the Apple platform”, the vice-president said.
There are other cases that concern the App Store, confirmed Mrs Vestager. These cases concern e-books and the App Store itself. In the event of a breach of EU law, redress may be sought if one considers that one has been wronged by the company in question, she said.
Spotify satisfied. In its complaint, Spotify argued that such a 30% commission was a violation of fair competition rules. “This is a crucial step in holding Apple accountable for its anti-competitive behaviour, ensuring freedom of choice for all consumers and a level playing field for developers”, a Spotify official said on Friday.
In a statement, Apple recalled that its App Store, due to the large number of users, had largely helped Spotify to become the largest music streaming service in Europe. “Spotify wants all the benefits of the App Store, but doesn’t think it should pay anything for it”, Apple said.
“Apple has been using its App Store for some time to keep competitors at bay by using dodgy contractual clauses and exorbitant fees. By making use of these anti-competitive practices, gatekeepers such as Apple are preventing true competition from emerging”, commented MEP Markus Ferber (EPP, Germany).
The Commission opened an in-depth investigation into Apple’s App Store rules on 16 June 2020 (see EUROPE 12507/2).
Link to this case: https://bit.ly/2S5mAfh (Original version in French by Lionel Changeur)