Music streaming

Apple has distorted competition in music streaming market, says EC

The European Commission (EC) filed antitrust charges against Apple after an investigation found the company “abused its dominant position in the music streaming market” to stifle competition.

Following a complaint filed by Spotify in 2019, the EC opened an investigation to determine whether Apple’s rules for developers who distribute apps through the App Store violate EU competition rules.

The investigation specifically looked into the mandatory use of Apple’s Integrated Purchasing System (IAP), which charges app developers a 30% commission on all in-app purchases, as well as the policies of the App Store which prohibits developers from directing consumers to other means. to buy content outside of apps that might be cheaper.

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The Commission said today that its preliminary view was that Apple had violated competition laws by using its position as custodian of the App Store to “distort competition in the market for music streaming services by increasing the costs of competing developers of music streaming applications ”.

The EC specifically challenged the IAP that Apple imposes on app developers and said it was concerned that Apple’s restrictions on app developers would prevent them from “notifying iPhone and iPhone users. iPad alternative and cheaper shopping possibilities “.

While the EC’s antitrust complaint focuses on music streaming, it may have broader implications for in-app purchases and whether Apple’s cut is passed on to consumers.

Executive Vice President Margrethe Vestager, Competition Policy, said: “Our preliminary conclusion is that Apple is a gatekeeper to iPhone and iPad users through the App Store. With Apple Music, Apple also competes with music streaming providers.

“By setting tough rules on the App Store that put competing music streaming services at a disadvantage, Apple is depriving users of cheaper music streaming choices and skewing the competition. This is done by charging high commissions on every transaction in the industry. App Store for competitors and prohibiting them from informing their customers of alternative subscription options. “

The EC noted that its preliminary findings “are without prejudice to the outcome of an investigation”.

Following the EC decision, Spotify CEO Daniel Elk wrote on Twitter: “Today is a big day. Fairness is key to competition. With the [European Commission] Statement of Grievances, we are one step closer to creating a level playing field, which is so important for the entire European developer ecosystem. “

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In a statement, Apple said, “Spotify has grown into the world’s largest music subscription service, and we’re proud of the role we’ve played in this area. Spotify does not pay Apple any commission on more than 99% of its subscribers, and only pays a 15% commission on the remaining subscribers they have acquired through the App Store.

“At the heart of this matter is Spotify’s demand that they should be able to advertise alternative offers 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 it. The Commission’s argument on behalf of Spotify is the opposite of fair competition. “

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