EU Announces Two Antitrust Investigations of Apple

Posted on June 16, 2020 by Paul Thurrott in Apple, iOS, iPadOS, Mobile with 16 Comments

The European Commission has formally opened two separate antitrust investigations of Apple, for its App Store and electronic payment system. The announcement comes one year after the regulatory body opened preliminary investigations of the tech giant.

The first investigation, of Apple’s App Store policies, comes in the wake of a formal complaint by Spotify, which alleges—correctly—that Apple abuses its stranglehold on app distribution to its mobile platforms. But don’t believe that the EU does anything quickly: The EC opened its preliminary investigation into the App Store in May 2019.

“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,” EU executive vice president Margrethe Vestager said in a prepared statement. “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. I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”

The Commission says it has two concerns related to the App Store. First, hat the firm requires app makers to use Apple’s “own proprietary in-app purchase system” and charges them a 30 percent commission on all subscription fees through IAP. And second that it prevents app makers from telling their own users about “alternative purchasing possibilities outside of apps.” That latter topic has come to light repeatedly, with Amazon being a prime complainer of this so-called “vig” strategy, but the issue, of course, is that those alternative purchasing options are usually cheaper, so Apple isn’t just disadvantaging the competition, it’s also causing consumer harm.

As for Apple Pay, that investigation concerns “Apple’s terms, conditions and other measures for integrating Apple Pay in merchant apps and websites on iPhones and iPads, Apple’s limitation of access to the Near Field Communication (NFC) functionality (“tap and go”) on iPhones for payments in stores, and alleged refusals of access to Apple Pay.”

“It appears that Apple sets the conditions on how Apple Pay should be used in merchants’ apps and websites,” Ms. Vestager said. “It also reserves the ‘tap and go’ functionality of iPhones to Apple Pay. 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. I have therefore decided to take a close look at Apple’s practices regarding Apple Pay and their impact on competition.”

The EC says that both investigations will be carried out “as a matter of priority.”

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Comments (16)

16 responses to “EU Announces Two Antitrust Investigations of Apple”

  1. Avatar

    bart

    Let's hope the US will join the party sooner than later

  2. Avatar

    jimchamplin

    1) Make them allow links outside the Store.


    2) What? Would that mean that they’d have to allow Android Pay? Or do they mean stupid crap like Walmart Pay that use those garbage QR codes instead of NFC?

    • Avatar

      lvthunder

      In reply to jimchamplin:

      Say goodbye to free apps if #1 happens. Apple uses that money to pay for the free apps and updates to happen. Some of these apps update themselves once a week.

    • Avatar

      wright_is

      In reply to jimchamplin:

      2. means that they NFC would be opened up for other purposes, not just Apple Pay. The 2 banks I use have their own NFC payment apps, all information goes directly to the bank, none of it goes to Google. That is the difference. If you use Apple Pay, they broker the transaction and get the information on where you have paid for stuff. The banks transaction fees are also significantly lower than Apple's. (0.9% for debit cards, 1.9% for credit cards, I think Apple and Google are around 2.5% - 3%, not really a wonder banks and merchants here we slow to accept Apple Pay and Google Pay, it is 2.5 - 3 times as expensive per transaction as a debit card.

  3. Avatar

    lvthunder

    Of course Apple sets conditions on how Apple Pay should be used in merchants' apps and websites. If they didn't a website or terminal could come out with an insecure or out of spec method of using Apple Pay. Just imagine using Apple Pay on a website that didn't have SSL for instance.


    These are both ridiculous, but the Apple Pay one is just the EU trying to stick it to a successful US tech company.

    • Avatar

      wright_is

      In reply to lvthunder:

      Apple Pay is considerably more expensive for the merchant and the bank in Europe. I think something like 2.5 - 3x the transaction fee of a debit card (most common payment method) and Android lets you use the banking app, which uses the NFC to emulate the debit card transaction, you don't have to use Google Pay on Android, on Apple, AFAIK, the banking apps can't use the NFC interface to do the transactions themselves, cutting out the middle-man and cutting out another source of tracking.

      This isn't about sticking it to Apple, this is about consumer freedom.

  4. Avatar

    davidlbangs

    Of course Apple is abusing their power over apps being used in its devices, and I’m glad the European Commission os looking into. What happened to US anti-trust enforcement?


    As for the comments from users supporting Apple, of course they need to derive some revenue to support free apps and some control to ensure security. But they’ve got it so I can’t rent a movie or buy an audiobook from anybody but Apple without using my laptop to do the purchase. Amazing abuse.

  5. Avatar

    Hawaiianteg

    Nothing is gonna happen. This has been like this since day one. No one can say they didnt know about the 30% cut. Also the ones who are really complaining are the middle men apps who also take a huge cut of their own on their own platform. GTFO and get a better business model. You can't expect Apple to do what you yourself won't do. I wonder if amazon will let me sell books on their store but let me use my own payment method so I don't have to go through them, OF COURSE NOT.

    • Avatar

      jgraebner

      In reply to Hawaiianteg:

      Kindle devices allow sideloading of books obtained from sources other than Amazon. They even provide a custom email address that you can send the books to in order to load them onto the device. If you are talking about physical books, there are other retailers that compete with Amazon or you can set up your own shingle and sell your books yourself.


      The problem with Apple's business model isn't that they don't permit people to sell on their store without sharing revenue with Apple. It's that they have made their store the only method of distribution, and added draconian policies around subscriptions, on a platform that has roughly half the market share.

  6. Avatar

    cglong

    NFC had the potential to change how we interact with the real world but Apple Pay has killed that dream. Glad they're looking into that as well.

      • Avatar

        cglong

        In reply to lvthunder:

        Three concrete examples:

        1. Coke Freestyle machines used to have NFC chips that allowed you to create your ideal mix, hold your phone to it, and automatically start dispensing it. Since iPhones have such a large purchasing power, they decided to add a QR-code-and-account based system; for obvious reasons, it doesn't make sense to maintain two methods, so they killed the NFC one and now everyone needs to make an account to use it.
        2. We were encouraged back in 2014 to use NFC to exchange contact information at a work conference I attended. Problem is, none of the iPhone users got to participate, so they switched back to paper business cards.
        3. Some smart home devices ship with an NFC tag for easy pairing, but again, there has to be a backup implementation for iPhone users. IME, this is usually some wonky setup where the device creates its own Wi-Fi network which you have to join from your iPhone.

        IOW, NFC goes far beyond payments and makes many interactions with smart things much more fluid.

    • Avatar

      toukale

      In reply to cglong:

      For a company with a 15% niche market shares (like many likes to point out) that's an awful lot of power they have. Android last time I checked had 85% of the market. If any company could make or break NFC success Apple is not it.

      • Avatar

        Andi

        In reply to toukale:

        This is not about market share. Plus Apple's share in the western part of EU is likely higher. In the EU we care about potential harm to consumers and not some arbitrarily set market share. Secondly, payments are not akin to ebooks. This is a tightly regulated market where companies don't do as they wish. Epayments are about interoperability and maximum competition.

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