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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