EU charges Apple with antitrust violations stemming from Spotify case
The European Union on Friday charged Apple with antitrust violations, alleging the U.S. company abuses its dominant position in the marketplace, the Wall Street Journal reports.
Why it matters: The European Commission said Apple violated antitrust laws by requiring music-streaming apps to use its in-app payments system to sell digital content, and by charging high commission fees on apps that compete with its music-streaming app, Apple Music.
- The Commission alleges that Apple also abused its power by limiting how app developers can inform users about cheaper subscription services.
Context: The EU's investigation into Apple stems from a complaint against Apple's commission fees from Spotify, a music streaming app in direct competition with Apple Music.
- Apple will have a chance to argue against the antitrust charge. If found guilty, the company could face a fine of up to 10% of its annual revenue and will be required to change its business practices.
What they're saying: "Our preliminary conclusion: Apple is in breach of EU competition law. Apple Music compete[s] 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," EU antitrust chief Margrethe Vestager tweeted Friday.
- “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 said in a statement Friday.
The other side: "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 Friday.
- "Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired 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."
- "The Commission’s argument on Spotify’s behalf is the opposite of fair competition."
Thought bubble, via Axios' Ashely Gold: The EU decision comes as Apple comes under increasing scrutiny for its App Store practices in the U.S. Expect Apple to fight hard on both fronts.
The big picture: Epic Games, the developer of the video game Fortnite, filed a similar antitrust complaint against Apple's in-app payment system in February.