Apple’s regulations for competing music streaming services, according to the EU’s executive Commission, ended up costing customers more money and restricting their options. Apple was accused of breaking antitrust laws by European Union regulators on Friday, arguing that the iPhone manufacturer distorts music streaming market by enforcing unfair rules for competing services in its App Store. The EU’s executive Commission has expressed its displeasure with Apple’s regulations for music streaming platforms that compete with Apple Music, claiming that they increase consumer costs.
The charges highlight Apple’s long-running dispute with Spotify, which lodged a lawsuit that prompted the inquiry – one of four the company is facing from the EU. Other major US tech firms, such as Amazon and Google, are also being investigated by Brussels regulators, as part of an increasing global campaign to limit their influence. Margrethe Vestager, the EU’s competition regulator, has two major concerns. One involves Apple’s practise of requiring software developers who sell digital products to use its in-house payment system, which charges a 30% fee on all subscriptions. Another issue is that Apple forbids software developers from informing consumers of alternative ways to pay for subscriptions that do not need them to go online.
Apple has denied the allegations, stating that it is proud of its role in helping Spotify become a music streaming behemoth. Spotify also mentioned that for 99% of its paying users, it does not pay Apple a fee. “Once again, they want all of the App Store’s advantages but don’t believe they should have to pay for it,” Apple said in a statement. “The Commission’s case in Spotify’s favour is anti-competitive.”
Although Spotify has flourished amid the limitations, smaller music streaming companies such as Deezer and Soundcloud have suffered, as a result of them, according to Vestager. Many other app developers depend on the App Store as a “gatekeeper” to iPhones and iPads, so the regulations are a problem beyond just music streaming services. “This considerable market influence cannot be allowed to go unchecked,” Vestager told reporters in Brussels, “because the conditions of access to the Apple App Store are critical for app developers’ success.”
Apple Music, according to Vestager, is exempted from the same regulations, which disadvantages competitors by increasing prices, lowering profit margins, and making them less appealing on the App Store. She claims that the issue isn’t with the fee itself, but rather with the fact that Apple only applies it to payments for digital content, not other services like transportation or food delivery. According to the EU inquiry, the price of a monthly subscription was usually increased from 9.99 euros to 12.99 euros ($15.70), she said.
Spotify refuses to offer premium subscriptions through Apple’s app payment scheme, instead directing users to the company’s website. Epic Games, the company behind the iconic video game Fortnite, has also lodged an antitrust lawsuit with the European Union against Apple. Apple removed the Fortnite app after it attempted to circumvent the App Store by using its own payment scheme. App developers can’t get the same insights into their users as Apple, such as the reason for cancelling a subscription, because of Apple’s ban on engaging with consumers, according to Vestager. “They are not only not allowed to mention their websites or any connection to them in their own apps,” Vestager explained.
“They are also prohibited from sending emails to users who have built accounts in the app in order to remind them of cheaper alternatives.” The EU has given Apple 12 weeks to respond to their concerns. Companies are allowed to provide a remedy under EU competition law, and Vestager said that she believes “Apple should end the infringement” and not do something similar. Breach penalties may be as high as 10% of a company’s annual sales. This may result in a fine of up to $27.4 billion for Apple, which had $274.5 billion in sales in its most recent fiscal year. The EU’s decision was applauded by Spotify. In a statement, the company’s chief legal officer, Horatio Gutierrez, called it “a crucial move toward keeping Apple responsible for its anticompetitive conduct, ensuring meaningful choice for all customers and a level playing field for app developers.”
