EU says Apple’s App Store breaks competition rules after Spotify complaint


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LONDON — Apple is breaching European competition rules by the way it distributes music streaming apps through its App Store, the European Commission said Friday.

“The European Commission has informed Apple of its preliminary view that it distorted competition in the music streaming market as it abused its dominant position for the distribution of music streaming apps through its App Store,” it said in a Statement of Objections send to Apple.

The European Commission, the EU’s executive arm, opened an antitrust investigation into the App Store last year, after the music streaming platform Spotify complained in 2019 about Apple’s license agreements.

These mean that app developers have to pay a 30% commission on all subscription fees that come through the App Store.

On Friday, the Commission said it took issue with the “mandatory use of Apple’s own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple’s App Store.”

At the same time, app developers are unable to inform users of alternative ways to purchase the same apps elsewhere — another issue the Commission said it was concerned with.

An e-book and audiobook distributor also filed a complaint against Apple in March 2020 for similar concerns, while Epic Games — which is already locking horns with Apple in a U.S. legal battle — filed an antitrust complaint against the iPhone maker with the European Commission earlier this year.

Apple was not immediately available for comment when contacted by CNBC.

This is not the first investigation that the European Commission has brought against Apple. The commission decided in September to take Apple and the Irish government to the highest court in the European Union for what Brussels deems unfair taxation practices.

The EU ruled in 2016 that Apple had to repay 13 billion euros ($15.7 billion) in unpaid taxes to the Irish government, after the latter granted “undue tax benefits.” Apple and the Irish government have contested the decision and the case is still in court.

Hoping to overcome long legal battles and make its markets fairer, the European Union is working on new regulation that could ultimately impact many of the U.S. tech giants.

The Digital Markets Act is likely to end what’s known as self-preferencing — when, for instance, app search results in an Apple product prioritize those developed by the tech giant. The idea is to give smaller app developers the same chance of being found and chosen by consumers.

The legislation is still being discussed by European lawmakers. But, apart from enforcing practical changes, it will also have the power to fine companies up to 10% of their worldwide annual turnover.

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