On June 16, 2020, the Commission launched four formal investigations into Apple’s business practices. Three of the investigations seem to follow the same theory of harm and zero in on contract terms that Apple imposes on developers wishing to distribute apps through the App Store on Apple devices, and whether Apple has been using those terms to disadvantage app developers that compete against Apple’s own apps.[1] One of these investigations concerns the music streaming market, another relates to audio books/e-books, while the third in principle concerns all other apps that “are directly competing with apps or services offered by Apple”[2] (although it is understood the Commission is particularly looking at the markets for cloud services and videogames). The Commission’s fourth investigation relates to Apple Pay, Apple’s solution for online payments on iOS devices.[3]
- App Store investigations. It is alleged that Apple requires rival app developers to use Apple’s own proprietary in-app purchase system (“IAP”) for any purchases made through their app (notably, subscriptions), for which Apple charges a 30% commission. It is also claimed that app developers are not allowed to inform users of alternative purchasing possibilities outside of apps. Consequently, Apple’s rivals are reported to have either disabled the in-app subscription possibility altogether (prompting users to instead subscribe to paid services through the developer’s website), or raised their in-app subscription fees in order to bear the cost of distributing their apps on Apple’s As reported in our March 2019 EU Competition Law Newsletter, Spotify claims it had to raise its monthly subscription fee from $9.99 to $12.99 in 2014 for this very reason; Apple then launched Apple Music for the monthly price of $9.99 a year later (forcing Spotify to stop offering users the in-app subscription possibility).
In addition, the Commission is concerned that the IAP obligation gives Apple full control over the relationship between rival developers’ and their customers, which could potentially allow Apple to impede rivals’ access to customer information and obtain valuable data about their activities and offers.
The Commission’s investigations are likely to focus on whether Apple’s platform gives rise to a dominant position and whether its terms constitute abusive leveraging in violation of Article 102 TFEU.[4] The case is expected to show whether and how the Commission will apply in practice the competition policy recommendations published in the Special Advisors’ Report of 2019.[5] Among other things, the Report recommends the expansion of the abuse concept by applying it, not only to self- preferencing by digital platforms that constitute an essential facility,[6] but also to “wherever it is likely to result in a leveraging of market power and is not justified by a pro-competitive rationale.”[7] In addition, the case might clarify what a dominant undertaking’s “special responsibility” means in the context of digital platforms: Competition Commissioner Vestager has previously indicated this could be “[setting] the rules in a way that keeps markets open to competition” rather than “[helping] their own services.”[8]
- Apple Pay In a separate matter, the Commission is investigating Apple Pay, Apple’s solution for mobile payments on iOS devices.[9] The investigation considers whether Apple forecloses rival providers of mobile payments from offering their solutions to users of iOS devices. More specifically, the Commission is looking into (i) “Apple’s terms, conditions, and other measures” related to the integration of Apple Pay for purchases made on merchant apps and websites accessed from iOS devices; as well as (ii) favoring Apple Pay, as this is the only solution that has access to the so-called “tap and go” technology embedded in iOS mobile devices.[10]
[1] Apple – App Store Practices (music streaming) (Case COMP/AT.40437), Apple – App Store Practices (e-books/audibooks) (Case COMP/AT.40652), and Apple – App Store Practices (Case COMP/AT.40716). All three investigations are ongoing.
[2] Apple – App Store Practices (Case COMP/AT.40716), Opening of Proceedings.
[3] Apple – Mobile payments (Case COMP/AT.40452), investigation ongoing.
[4] The investigations were prompted by complaints by Spotify, the provider of music streaming services, and Kobo, a distributor of e-books and audiobooks. The Commission appears to have expanded its examination of the relevant App Store rules beyond the two markets singled out in the complaints, and will now examine all markets where Apple competes with third-party apps distributed on iOS devices. See Apple – App Store Practices (Case COMP/AT.40716), Notice on Opening of Proceedings, June 16, 2020: “The proceedings […] concern the terms that govern the use of Apple’s App Store in the European Economic Area by developers offering apps (or certain content within these apps) which are directly competing with apps or services offered by Apple (excluding music streaming apps or ebooks/audiobooks apps for which separate proceedings are initiated […]).” See also Commission’s press release, “Antitrust: Commission opens investigations into Apple’s App Store rules,” June 16, 2020, available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073.
[5] Report by J. Crémer et al., Competition Policy for the digital era, 2019, available at: https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf, p. 7.
[6] Under EU case law, an essential facility is an input “indispensable” for carrying out a certain activity because there are no actual or potential substitutes. A refusal to grant access to such input can amount to an abuse of dominant position under Article 102 TFEU if it is likely to eliminate all effective competition on the market that relies on that input, and insofar as there is no objective justification. See Oscar Bronner GmbH & Co. KG v. Mediaprint Zeinungs-und Zeitschriftenverlag Gmbh & Co. KG (Case C-7/97) EU:C:1998:569, para. 41.
[7] “[…] we believe that self-preferencing by a vertically integrated dominant digital platform can be abusive not only under the preconditions set out by the ‘essential facility’ doctrine, but also wherever it is likely to result in a leveraging of market power and is not justified by a pro-competitive rationale. […] we propose that, to the extent that the platform performs a regulatory function, it should bear the burden of proving that self-preferencing has no long-run exclusionary effects on product markets.” See Report by J. Crémer et al., Competition Policy for the digital era, 2019, available at: https://ec.europa.eu/competition/ publications/reports/kd0419345enn.pdf, p. 7.
[8] Speech by Commissioner Vestager, Building a positive digital world, Digital Summit, Dortmund, Germany, October 29, 2019.
[9] Apple – Mobile payments (Case COMP/AT.40452), investigation ongoing.
[10] Commission’s Press Release IP/20/1075, “Antitrust: Commission opens investigation into Apple practices regarding Apple Pay,” June 16, 2020.