On April 30, 2021, the European Commission issued a Statement of Objections to Apple alleging it abused its dominant position in the market for the distribution of music streaming apps.[1] The Commission’s investigation follows Spotify’s complaint filed in March 2019,[2] and marks the first major procedural development in the four investigations opened against Apple in June 2020.[3]
Apple’s alleged dominant position
The Commission has reached the preliminary view that Apple’s distribution platform, the App Store, is the “sole gateway” through which app developers can reach Apple device users. Executive Vice-President Vestager commented that through its App Store Apple is an apparent “gatekeeper” to users of iPhones and iPads. This affinity for words starting with “gate” directly links this finding to the current Proposed Digital Markets Act, which focuses on platforms that have a “gatekeeper” role in digital markets.[4]
Apple’s alleged abusive conduct
The Commission is taking issue with two rules imposed by Apple in agreements with music streaming app developers:
- Apple’s practice of charging app developers a 30% commission fee on all subscriptions purchased by consumers through Apple’s mandatory in-app purchase system (“IAP”).
- So-called “anti-steering provisions” that allegedly limit the ability of app developers to inform users of alternative mechanisms to complete a purchase outside of the apps where the purchase could avoid relying on the
The Commission considers that both rules effectively increase the costs of music streaming app developers that compete with Apple’s own streaming service. According to the Commission, most app developers pass this fee on to end-users, leading to higher prices for consumers.
Apple will now have the opportunity to contest these preliminary findings. Having seen this response, the Commission will determine whether to adopt an infringement decision against Apple. Such an order would likely compel Apple to change its App Store practices.
[1] Apple – App Store Practices (music streaming) (Case COMP/AT.40437). See Commission Press Release issued on April 30, 2021, available at: https://ec.europa.eu/ commission/presscorner/detail/en/ip_21_2061.
[2] As reported in our May 2019 EU Competition Law Newsletter.
[3] As reported in our June 2020 EU Competition Law Newsletter.
[4] See the Commission’s draft Online Platform Regulations, as detailed in our December 2020 EU Competition Law Newsletter.