Apple is in breach of EU competition law, says the EU's antitrust chief Margrethe Vestager.
Requiring App Store apps to use Apple's in-app purchase system, and limiting their ability to tell users about alternative purchasing possibilities, distorts competition. Also, it infringes Article 102 of the Treaty on the Functioning of the European Union, which prohibits abuse of a dominant market position.
It is a preliminary conclusion, she noted in a news conference today. Apple will still have a right to reply to the EU's Statement of Objections, in writing or at an oral hearing. But this is unlikely much to diminish a sense that Big Tech is stumbling into an antitrust nightmare, in Europe, America and Britain. Especially since the ruling comes ahead of Apple appearing in US federal court in a case brought by Fortnite maker Epic Games.
Apple Music competes with other music streaming services like Spotify, argues the EU executive vice president. But it has a monopoly on distributing these apps to Apple devices. So when Apple charges its rivals high commission fees in the App store, and forbids them to inform users about alternative ways to subscribe, it abuses its dominant market position.
Consumers lose out, she says.
As well as music, Vestager says the EU's also taking an interest in Apple Pay, along with gaming apps.
This may mean an end to Apple's current messy strategy about Xbox's xCloud and Google's Stadia. Currently, each xCloud and Stadia game needs to have a separate App Store listing, and be downloaded from the store, not through the streaming app.
Taking a bite out of antitrust
The charge sheet also shows that Apple is not winning immunity from Big Tech's antitrust woes, just because of its moves in iOS 14.5 to protect users' data.
"Well done; take the one company that seeks other income because they are not selling our data and privacy," quips investor David Geens.
The case all began in March 2019, with a complaint by Spotify. And that company seemed happy today.
The EU's statement of objections represents “a critical step toward holding Apple accountable for its anticompetitive behavior,” says Horacio Gutierrez, the streaming music service's head of global affairs. This will defend "meaningful choice for all consumers and a level playing field for app developers," says Gutierrez.
Orchards of views
But what's a gatekeeper to do?
"Apple's surely entitled to charge something to app developers," argues the Centre for European Reform's Zach Meyers on Twitter.
And while he says he isn't necessarily defending the 30% fee Apple charges on most in-app purchases, he says the way the Commission frames the problem "seems to have downsides."
If Apple recovers less from in-app purchases, will it move to up-front charges, so developers start charging for apps that are currently free? He's "not sure this helps consumers or developers," Meyers says.
Meanwhile, fines "alone do worse than nothing, they simply price the monopoly violations," cautions Ruby on Rails creator David Heinemeir Hansson.
Instead, Vestager should issue a "direct decree to allow Spotify and other app makers to use their own billing systems," he argues. Though he admits since the EU could continue to fine Apple up to 10% of its annual revenue each year until it alters its practices, that begins to have some teeth.
This could be as much as $27 billion, though the EU rarely imposes the full thing. EU law also doesn't impose a deadline on how long investigations can last, so antitrust is unlikely to go away. Much as Apple would rather people be talking about its new purple iPhone 12 instead.
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