UK and EU take an antitrust bite out of Apple

In both Brussels and London, it was the day to take a bite out of Apple.

The UK is opening a formal antitrust investigation into Apple, while the EU, two years after opening its own, is preparing antitrust charges which it may send to the iPhone maker before the summer.

The nub of both complaints is the way the App Store makes app developers use its payment system.

App makers have to pay commission – 30% in the first year and 15% thereafter.

Application overload: Apple's App Store policies are being targeted by antitrust regulators in the UK and EU.  (Source: Photo by James Yarema on Unsplash)
Application overload: Apple's App Store policies are being targeted by antitrust regulators in the UK and EU.
(Source: Photo by James Yarema on Unsplash

Apple's own services, however, do not bear this cost. Spotify says Apple Music can therefore undercut it on price.

Spotify charges US Premium users $12.99 a month on the App Store, while Apple Music is $9.99 a month.

Hardcore problems

The music streaming service brought the case to the EU two years ago.

It now appears to have convinced regulators, in Brussels and beyond, that Apple's use of its substantial market heft reduces consumers' choice and forces them to pay more.

The EU case could see Apple forced to pay a fine, or make changes to its App Store model in Europe.

In the UK, the competition watchdog says it, too, will now look into antitrust effects of Apple forcing iPhone and iPad users to use its own payment system for in-app purchases.

The regulator would give "careful scrutiny" to complaints Apple is "using its market position to set terms which are unfair or may restrict competition", says Andrea Coscelli, head of the Competition and Markets Authority.

Biden's tech critic from the Big Apple

But if you think at least the heat's off Apple in the US, don't.

The Biden administration has just appointed Columbia law professor Tim Wu, one of the most outspoken critics of Big Tech, as special assistant to the president for technology and competition policy.

The appointment suggests the new US administration plans to act to counter the size and influence of companies like Apple, and work with Congress to strengthen antitrust laws.

President Biden said over the election campaign he could be open to breaking up tech companies.

Meanwhile, the antitrust subcommittee of the US House of Representatives' judiciary panel has met again, giving details on how legislation could be introduced in the spring.

The legislation could push nondiscrimination as a principle, that dominant platforms couldn't give preference to their own products over those of competitors.

It may also include structural remedies, like breaking apart different lines of business or platforms currently under the same company.

The Senate's antitrust panel chair, Amy Klobuchar, has introduced a bill this month which could apply fines of up to 15% of annual revenue for Apple and other companies found to be acting anticompetitively.

Taking fees down a nibble

In November, Cupertino tried to head off growing criticism of its App Store fees by saying it was halving the commission small businesses would pay to use the platform.

From the start of 2021, companies that earned less than $1 million in 2020 could pay the lower 15%.

Apple has not always been so subtle.

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When, last August, Epic Games' Fortnite launched its own in-app payment system to get around this, Apple banned the game from the store.

Amazon and Netflix have managed to get around it by selling video subscriptions and books on their websites instead of their iPhone apps. Spotify makes most of its revenues from subscriptions, though, not in-app purchases.

A bite out of Apple turnover

In October, Apple warned investors in a filing that it faced regulatory pressure to reduce its commission in the App Store, and doing so would cause the Cupertino-based company's financial condition to be "materially adversely affected."

The App Store launched in 2008, and currently hosts 1.8 million apps, according to Apple, which says it is visited by half a billion people every week.

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Pádraig Belton, contributing editor special to Light Reading

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