Apple could be facing a $27 billion fine for allegedly violating EU antitrust laws and putting rival music streaming services at a disadvantage on its App Store.
On Friday (30 April), the European Commission announced that it took issue with the mandatory use of Apple’s own in-app purchase mechanism imposed on third-party music streaming app developers to distribute their products. The Cupertino company takes a 30 percent commission fee on all subscriptions bought via their in-app purchase system. Regulators were also concerned about alleged restrictions in place that prevent developers from informing customers of alternative, cheaper purchasing options.
If found guilty, Apple could face a fine of up to 10 percent of its annual revenue – roughly $27 billion, based on its $274.5 billion earnings in 2020.
“Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store,” European Competition Commissioner Margrethe Vestager said in a statement. “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.
“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.”
This latest antitrust charge traces its origins to a formal complaint filed by Spotify in 2019. Spotify had reportedly withdrawn subscription purchases through its iPhone and iPad apps in 2016 in order to avoid Apple’s fees.
Spotify CEO Daniel Ek lauded the EU’s stance on the matter in a tweet on 30 April: “Today is a big day. Fairness is the key to competition. With the @EU_Commission Statement of Objections, we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers.”
Today is a big day. Fairness is the key to competition. With the @EU_Commission Statement of Objections, we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers. https://t.co/dOw1K0Qo1W
— Daniel Ek (@eldsjal) April 30, 2021
Apple defended its position in a statement shared to TechCrunch. “Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that,” the tech giant wrote.
“Spotify does not pay Apple any commission on over 99 percent of their subscribers, and only pays a 15 percent 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.”