DigitalizationAntitrust: Investigation against Apple on App Store rules

Today, the European Consumer Organization BEUC announced that it would join the European Commission's investigation against Apple for distorting competition in music streaming. On April 30, 2021, the European Commission filed formal charges against Apple based on its preliminary view that Apple distorts competition by abusing its dominant position in the market for distributing music streaming apps through its App Store.

Apple’s busines model includes a strongly intertwined system between Apple devices and software, in which the App Store presents the only port for Apple users to purchase apps and for developers to offer their apps to Apple users.

This antitrust investigation relates to the following non-negotiable rules in Apple’s agreements with music streaming app developers via its App Store:

  • Firstly, Apple makes use of its proprietary in-app purchase system (IAP) mandatory for the distribution of paid digital content. With this, Apple becomes the intermediary for all IAP transactions and takes over the billing relationship, as well as related communications for competitors.
  • Moreover, Apple charges app developers a 30 percent commission fee on all subscriptions bought through the mandatory IAP. This increases the costs of competing music streaming app developers, which in turn lead to higher consumer prices, as most streaming providers pass this fee on to end users.
  • Secondly, Apple’s so-called 'anti-steering provisions' limit the ability of app developers to inform users of alternative purchasing possibilities outside of apps. Although Apple allows consumers to use music subscriptions purchased elsewhere, its rules prevent developers from informing users about these options, which are usually cheaper.
  • Overall, the Commission is concerned that Apple users pay significantly higher prices – either for their music subscription services or because they are prevented from buying cheaper subscriptions directly in their apps.

Margrethe Vestager, Commission Executive Vice-President, in charge of competition policy, said: "App stores play a central role in today's digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads 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 competition. 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."

Monique Goyens, Director General of BEUC, commented further: "We look forward to working with the Commission to ensure that Europe’s consumers have access to a full range of music streaming services without their choices being unfairly restricted or prices being artificially inflated."

Source: BEUC & EC

More information and the BEUC press release