Apple hit with landmark EU antitrust charges over App Store practices

In a landmark move by European Union (EU) antitrust regulators, Apple has been charged with abusing its dominant position in the music-streaming market by imposing restrictive rules on the App Store.

Apple App Store
Apple’s App Store

Jack Denton for MarketWatch:

Margrethe Vestager, European Commissioner for Competition
Margrethe Vestager, European Commissioner for Competition
The charges follow a 2019 complaint from music streaming platform Spotify, and carry a maximum penalty of up to 10% of Apple’s global annual turnover — what could amount to a multibillion-dollar fine.

This is the first time Apple has faced antitrust charges in the 27-member bloc, and the action represents one of a number of regulatory pressures on Apple globally that could lead to a change in the technology giant’s business model.

“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,” said Margrethe Vestager, the European Union’s head of both competition and digital policy, on Friday.

“This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options,” Vestager added.

MacDailyNews Take: You know, because when Sony sells TVs in Best Buy, they’re allowed to place placards next to each unit that say the same unit is cheaper at Target, along with QR codes that launch Amazon’s app offering the exact same TV at a lower price.

Margrethe Vestager is a ditz.

(See also: Apple wins fight over $14.9 billion tax grab in blow to EU – July 15, 2020)

In a statement regarding the EU antitrust charges, Apple said:

Spotify has become the largest music-subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store.

At the core of this case is Spotify’s demand they should be able to advertise alternative deals 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 that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.

34 Comments

    1. Spotify sells their service on their website, just like Sony also sells its TVs. Neither is allowed to use Best Buy, Target, or any other stores to promote their own stores, certainly not without paying.

        1. Talk about not even trying.

          Again, like I wrote above, Spotify can use their own store, online. Spotify does not require an iOS app to provide their service.

          Spotify has a web player, no iOS app required, which neatly undercuts their own complaint: https://open.spotify.com

          1. Interesting. Does Safari have an option to create a webpage shortcut to the home screen? If so Spotify can promote that method and Apple can claim that the App Store in no way prevents iOS users from enjoying Spotify conveniently. Depending on App features a user may have to give up, It may soften the anti-trust penalty. Even more so if the user is given the option to change the shortcut icon to any image they want.

            1. Of course iOS Safari allows saving an icon for the link to a web app on the user’s home page. Most nontech users can’t tell the difference between that and a native app. Antitrust “problem” of App Store “monopoly” solved.

        2. It’s not just that Spotify can use their own store. They actually do, which is how 99% of the current iOS Spotify App users buy their music. The remaining 1% pay for the convenience of using the app for purchases. That convenience does not come free, but Spotify wants it to be free because they see shifting overhead expenses to Apple on a “free” app as a great business model.

            1. Cynic, why would they want to use their own store for a free app? They can get far wider distribution through Apple, and all those app owners can easily buy music through the web. That’s how Kindle works, and I haven’t noticed Amazon being driven out of business.

              What Spotify wants is to sell their music directly through the app without paying Apple for the distribution costs involved. Not at all the same issue as if Apple were keeping Spotify from distributing its app to iPhone users..

            2. TxUser, if Spotify were able to distribute from their own app store or site they wouldn’t need to deal with Apple’s in-app purchase subsystem. Seems that’s a pretty good incentive for them to host their app themselves. For little known brands, yes, the Apple App store has the benefit of increasing mindshare among potential users. As a well known brand however, Spotify has no need to depend on Apple for increasing subscribers. IMO this is the crux of why large brands are chafing at needing to solely depend on the Apple’s App Store to distribute their App.

            3. TxUser… It’s not for us to judge why they would want to, or for Apple to judge eitehr. But I’ll give you at least one… they may not want to deal with Apple at all.
              There are other apps that Apple does not want that could otherwise be distributed though.

  1. Apple should demonstrate what antitrust really is since they are already being accused of it anyway…

    Offer Apple Music for free with the purchase of any Apple device as a value add. Governments can’t argue that “consumers are harmed” if they are given a free service for free.

  2. Interesting that Spotify is a European tech company. Nothing like protectionism in the guise of anti-trust law.

    Here’s a question: When all is said and done, will Apple be able to place ads for Apple Music on Spotify’s website?

  3. “ You know, because when Sony sells TVs in Best Buy, they’re allowed to place placards next to each unit that say the same unit is cheaper at Target, ”

    LOL this literally has to be the worst argument I have ever seen to support Apple‘s position. It is so incredibly non-applicable and misapplied it boggles the mind.

    Spotify is not arguing that Apple must tell customers about cheaper ways to buy their service. Spotify is arguing that within their own app THEY would like to be able to tell customers about cheaper options

    The more equivalent argument would be this: Best Buy preventing A TV manufacturer from including an insert in their own paid for box to tell customers about cheaper places they can buy the TVs. Preventing the TV manufacturer from doing their own marketing within their own box.

    1. Yeah, so after you’ve bought the TV from Best Buy, you can find the insert about cheaper places to buy the TV you’ve already bought inside the TV’s box. That’s some genius marketing concept right there.

    2. Actually, it’s a great concept. The customer can return their TV to Walmart and buy it direct from the manufacturer, which makes them more money. Somebody else will pay for Walmart’s restocking expenses. Just like Spotify wants to make more money and have Apple pay for the overhead.

          1. That’s a supply deal and confers some ownership rights to the seller. It’s also voluntary between two parties in a market of other parties. Then the customer buys it and it’s theirs.

  4. this is just the sleazy EU leadership with Margrethe Vestager at the helm of commerce, seeking to dig into Apple’s deep pockets for funding their Euro-shite politics

  5. The App Store was invented by Apple from nothing but their own idea and design. Apple provide access to use it free unless you use it to make money and are in such cases, totally entitled to take any percentage they want as the store is intended to exclusively supply software for their own phones and hardware products.

    Those allowed into this controlled environment do so under the rules Apple sets in order to protect the devices Apple makes but also enhance the products and running of them.

    The cost to run a global digital store such as this must be massive not to mention the updates, fixes, servers, electric etc…

    Spotify do not need to play in Apples playground but if they do then they must do it by Apples rules as Apples eco system is not a free for all to abuse or reap the rewards of Apples hard work; nor is Apples eco system open to anybody to do as they wish. It’s in the DNA of Apple to do it their way and allow others to use their products so long as they follow the rules they set in order that they do not have kaos or a Wild Wild West free for all that would ruin everything they have built.

    The App Store is part of a bigger system all designed and built for the exclusive use within a protected and controlled environment and this is why they are so successful. This is what apple owners want.

    Apple’s actions in how it runs its products are totally right and correct and I and I’m sure all other Apple owners are Apple owners because they don’t want a store like Google play or windows machines and that whole Wild West of apps which are riddled with cracks spy ware and trojans!

    Spotify must pay if they want to use Apples facilities to make money for themselves.

    1. In the good old days before infrastructure was built for the common good, there was a special breed of shysters that would buy up land around natural river fords. They would toss up a fence across the road and charge travelers for the privilege of crossing at the safe spot of the river.

      Apple didn’t build any ferry or bridge. Up to and including the Mac, software developers could make and distribute their work however they wished. Consumers could buy through the “safe” Apple store or they could buy elsewhere, their choice. With iOS, Apple merely fenced a garden, and they charge a gate fee to get in. But as we all know, Apple doesn’t guarantee your safety, and its rules for passage are less and less defensible as time goes on.

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