The European Commission has sent tech giant Apple an official statement of objections relating to the company’s alleged breach of competition rules in how it deals with music streaming apps in the App Store.
Apple has its own music streaming service, but the problem revolves around the App Store, where third parties make their own apps available. The Commission describes the App Store as “the sole gateway to consumers using Apple's smart mobile devices running on Apple's smart mobile operating system iOS. Apple's devices and software form a “closed ecosystem” in which Apple controls every aspect of the user experience for iPhones and iPads.”
Users of Apple devices can only use the App Store, imposing restrictions not only on users, but also on companies wanting to get their apps to the users. In theory, Apple allows competitors to list their products on the App Store, but in reality, the Commission found, developers are subject to Apple's “mandatory and non-negotiable rules”.
Among those rules is the obligatory use of Apple’s own in-app purchase system for subscriptions, on which Apple charges a 30% fee. Streaming providers usually pass that fee on to customers, which makes their products more expensive.
Secondly, developers are strictly forbidden from informing app users of the possibility of buying music subscriptions outside of the Apple ecosystem, where the cost is usually lower not least because the 30% fee is not paid.
“App stores play a central role in today's digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites,” said Margrethe Vestager, commissioner for competition policy.
“Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. 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 statement of objections is only the first step in the antitrust process. The parties, in this case Apple, can examine the documents the Commission has, and request a hearing to present their case.
“Sending a Statement of Objections and opening of a formal antitrust investigation does not prejudge the outcome of the investigations,” the Commission said.