The European Commission is launching two antitrust investigations into whether Apple’s App Store and Apple Pay undermine competition.
In Spotify’s case, the 30 percent cut forced the music-streaming provider to pass on costs to consumers, resulting in the monthly subscription fee going up from $9.99 to $12.99 for customers who subscribe and pay via Apple’s App Store.
The 30 percent cut also put Spotify at a disadvantage against Cupertino’s own competing streaming service Apple Music, which charges $9.99 a month. In response, Spotify has encouraged users to sign up via Spotify’s website. Nevertheless, Apple rules can prohibit app developers from notifying users about alternative ways to pay even outside their iOS apps.
“Apple’s competitors have either decided to disable the in-app subscription possibility altogether or have raised their subscription prices in the app and passed on Apple’s fee to consumers. In both cases, they were not allowed to inform users about alternative subscription possibilities outside of the app,” the commission said after a preliminary investigation.
The commission will therefore examine whether Apple may be causing harm to consumers by denying them chances to learn about and access alternative products at cheaper prices.
“It appears that Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple’s popular devices,” said commission EVP Margrethe Vestager. “We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers, for example with its music streaming service Apple Music or with Apple Books.”
Apple Pay Tap and Go
The second probe concerns Apple’s “tap and go,” contactless payment function via the iPhone’s NFC chip, which powers Apple Pay. But the commission is questioning why Apple holds exclusive control over the tap-and-go function embedded in iPhones when rivals could leverage the same technology to offer competing mobile payment systems to consumers.
“It is important that Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices,” Vestager added.
Depending on the outcome, Apple could be hit with a hefty fine or be forced to loosen its strict control over the iOS ecosystem. However, Apple denies any wrongdoing.
“Throughout our history, Apple has created groundbreaking new products and services in some of the most fiercely competitive markets in the world,” a company spokesperson told The New York Times. “We follow the law in everything we do and we embrace competition at every stage because we believe it pushes us to deliver even better results.”
In the US, the Supreme Court last year ruled that customers and developers can sue Apple over its App Store policies, paving the way for class-action lawsuits to proceed in court. The Justice Department has also opened an antitrust investigation into the biggest tech platforms to examine whether their practices are stifling competition.