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EU says Apple App Store breaches competition rules with music streaming

EU says Apple App Store breaches competition rules with music streaming
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The European Commission said Friday that Apple has abused its dominant position for music streaming apps through its App Store. 

The commission’s statement cites app developers' mandatory use of Apple’s in-app purchase system that charges developers up to 30 percent commission fees on all subscriptions bought through the app, as well as Apple’s “anti-steering provisions” which limit app developers from informing users of alternative purchasing possibilities outside of apps. 

“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,” Margrethe Vestager, the commission’s executive vice president  in charge of antitrust enforcement, said in a statement. 

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“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.” 

The commission said its preliminary view is that Apple’s rules distort competition in the music streaming market, and that in turn leads to higher prices for consumers for their in-app music subscriptions on iOS devices. 

If the preliminary findings are confirmed, Apple could face fines or be forced to change some of its business practices. The timeline of the process is unknown. 

The statement of objections about Apple Music’s dominance follows up on a complaint by music streaming app Spotify. 

Apple said the commission’s “argument on Spotify’s behalf is the opposite of fair competition.”

“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that,” Apple said in a statement. 

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The company said Spotify doesn’t pay Apple commission on “over 99% of their subscriber’s” and only pays a 15 percent commission on the remaining subscribers they get 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,” Apple’s statement continues.

Spotify cheered the commission's statement.

“Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications. The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers,” Spotify’s head of global affairs and chief legal officer, Horacio Gutierrez, said in a statement. 

Gutierrez was among executives from app companies that testified last week at a Senate Judiciary Committee antitrust hearing on app store market power. 

He and other app executives accused Apple of anti-competitive practices. 

Gutierrez testified that Apple threatened to ban Spotify from the App Store in 2013 unless it incorporated in-app payments which would make Spotify subject to the then-30 percent commission fees. 

Apple later launched its own streaming service, Apple Music. 

In addition to the increasing scrutiny from regulators and lawmakers in the U.S. and beyond, Apple is also gearing up for an antitrust trial that begins next week in California federal court. 

Epic Games, the developer behind the popular Fortnite game, is suing Apple over allegations of anti-competitive behavior after the game was kicked out of the Apple App Store in August after Epic Games put in place a payment system in an attempt to circumvent the 30 percent commission fees.