Apple broke competition law, EU says after Spotify complaint

Apple is in breach of EU competition law, the European Commission has said.

The company’s promotion of Apple Music ahead of rivals such as Spotify is unfair, commissioner Margrethe Vestager announced in a tweet.

Apple said in response that the European Commission’s argument “is the opposite of fair competition” and that it was being asked to give Spotify the ability to do things that “no store in the world allows”.

The decision comes amid mounting concern over whether Apple is abusing its power over its platform to favour its own services. It was announced just days before the beginning of a trial that will see Fortnite developer Epic accuse Apple of abusing its App Store platform, and during antitrust investigations in the US and UK, as well as Europe.

The latest decision follows a Spotify complaint, filed in 2019, that alleged that it was being unfairly held back by Apple. It argued that Apple should not be able to force Spotify and other subscription-based companies to give up a 30 per cent cut for transactions in the App Store – while keeping all of those profits for itself, when it came to its own services.

Ms Vestager also pointed to the fact that other apps are explicitly forbidden from encouraging customers to buy their subscriptions through other processes that would not charge the same cut.

“Our preliminary conclusion: Apple is in breach of EU competition law,” she tweeted.

“Apple Music compete[s] with other music streaming services. ButApple charges high commission fees on rivals in the App store & forbids them to inform of alternative subscription options.

“Consumers [are] losing out.”

In a further statement, Ms Vestager said that Apple is acting both as the “gatekeeper” of what apps are available in the App Store, as well as competing with other developers.

“By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition,” she said. “This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”

The initial findings are part of a “Statement of Objections” that has been sent to Apple. The company will now be able ot review the documents in the investigation and can then present its case in front of representatives from the European Commission as well national competition authorities, which will decide whether or not to confirm the initial findings.

If those initial conclusions are confirmed, Apple will be found in breach of Article 102 of the Treaty on the Functioning of the European Union. That “prohibits the abuse of a dominant position”.

In response to the the European Commission’s statement, Apple said that it disputed the conclusion and that the argument is unfair.

“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that,” a spokesperson said. “Spotify does not pay Apple any commission on over 99 per cent of their subscribers, and only pays a 15 per cent commission on those remaining subscribers that they acquired through the App Store.

“At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that.

“The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”

In a tweet, Spotify chief executive Daniel Ek backed the findings and said it was a “big day”.

“Fairness is the key to competition,” he wrote. “With the [European Commission’s] Statement of Objections, we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers.”