Cupertino increasingly focuses on services and content. But being a giant in the device market creates more of a problem on the Antitrust side. Apple “has distorted competition in the streaming music market by abusing its dominant position to distribute music streaming apps through the App Store.” The preliminary assessment of the European Antitrust contained in the «statement of objections» to the American group made known on Friday 30 April is expressed in these terms.
EU communication to Apple
This is the formal phase of the Commission’s investigations into suspected antitrust violations in which Brussels informs interested parties in writing of the objections raised against them. Recipients can review the documents in the disclosure investigation file, respond in writing and request a hearing to submit their observations on the case before representatives of the Commission and national competition authorities. Sending a statement of objections and opening a formal antitrust investigation does not affect the outcome of the investigation, for which there are no legal deadlines.
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The tug-of-war with Spotify
The Commission disputes the mandatory use of Apple’s in-app purchase mechanism imposed on music streaming app developers to distribute their apps via the App Store. In addition, the European Antitrust Authority is concerned that Apple applies some restrictions to app developers that prevent them from informing iPhone and iPad users of alternative and cheaper purchasing options. The Statement of Objections concerns the application of these rules to all music streaming apps that compete with the Apple Music streaming app in the European Economic Area. The case was opened following a complaint from Spotify, the global streaming leader.
Vestager: “Decisive app stores in the digital economy”
This is how the EU competition manager Margrethe Vestager explains the situation: «App stores play a central role in today’s digital economy. We can now shop, access news, music or movies via apps instead of visiting websites. Our preliminary conclusion is that Apple is a gatekeeper for iPhone and iPad users via the App Store. 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 the competition. This is done by charging high fees on every App Store transaction for competitors and forbidding them from informing their customers of alternative subscription options. ‘
The loyalty of the people of the Apple
Brussels notes that Apple’s devices and software form a ‘closed ecosystem’ in which Apple controls every aspect of the user experience for the iPhone and iPad. App Store is part of this ecosystem and the only service iPhone and iPad users can use to download apps for their mobile devices. The Commission found that Apple device users are very loyal to the brand and do not change easily. Consequently, to serve iOS users, “app developers must distribute their apps through the App Store, subject to Apple’s mandatory and non-negotiable rules.”