Apple Inc. is facing new European Union antitrust charges in the coming weeks following an investigation triggered by a complaint by Spotify Technology SA, Reuters reported today.
The additional charges will come on top of existing antitrust charges filed against Apple in April 2021. The charges from last year said Apple distorted competition in the mobile app industry through the App Store terms of service. The EU claims that some of the requirements Apple imposes on developers are anticompetitive.
In the original charges, the European Commission, the EU’s executive branch, claimed that Apple’s requirement to restrict streaming apps to making in-app purchases only through Apple’s IAP payment processing system was essentially raising prices. The second focus of the charges was restrictions imposed on developers that don’t use IAP.
The focus on streaming apps in the original changes leads to the new potential charges against Apple. Spotify filed an antitrust complaint with European regulators in 2019, claiming that Apple undertook unfair business practices.
The Spotify complaint alleged that Apple discriminately applies the requirement for companies to use its IAP transaction processing system and takes a 30% cut. Spotify specifically mentioned that Uber Technologies Inc. didn’t have to pay the 30%. The second part of the complaint claims that developers that choose not to use the IAP system also take a hit from an additional set of restrictions imposed on them by Apple.
“If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music,” Spotify Chief Executive Daniel Ek wrote at the time. “As an alternative, if we choose not to use Apple’s payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify.”
The antitrust action by the EU isn’t the first time Apple has been investigated over allegedly dubious business practices. The U.K. announced in March that it had launched an investigation into Apple on similar grounds. A decision on pursuing antitrust charges against both Apple and Google LLC as part of an ongoing investigation by the U.S. Department of Justice was delayed in December because of budget constraints.
In the EU, Apple will eventually have no choice other than to drop its restrictions in the years ahead. The Digital Markets Act, passed by the European Parliament in March, will make such practices illegal. However, Apple and other large tech companies have until the beginning of 2024 to comply.