Apple is Next Target of European Commission Investigations

European Commission executive vice president in charge of competition Margrethe Vestager is ramping up her scrutiny of U.S. tech giants, including Apple and Amazon. She’s currently targeting Apple’s “gatekeeper” position with third-party apps and Apple Pay. She is also looking more closely at Amazon’s position in online retail. Bloomberg Intelligence antitrust analyst Aitor Ortiz, however, noted that the $9 billion fine she levied against Google didn’t stop the tech giant from continuing to dominate search. The fines “don’t really have a deterrent effect,” he concluded.

Bloomberg reports that Vestager will “review whether Apple’s App Store violates competition law by forcing software makers to use its own in-app payment system that typically takes a 30 percent cut of subscription fees … [or] unfairly curbs developers from telling users about other, cheaper payment methods.”

The current case comes from last year’s complaint from Spotify that “Apple unfairly squeezes its music streaming service with ever-changing rules and a large cut of sales on the App Store.” University of Liege law professor Nicolas Petit said that the new case is likely to be “big, complex and sophisticated,” with the EU attempting to try out “new ideas on how some firms play a gatekeeper role for entire industries.”

Apple responded that, “it’s disappointing the European Commission is advancing baseless complaints from a handful of [rival] companies.” Apple’s shares rose 1.6 percent to $348.59. The EU may widen its probe, as “regulators continue to look at parental control apps as well as gaming apps.”

According to Petit, “the long game of European competition enforcers is to leave enough economic value on the table for smaller players,” including online merchants, app makers and news publishers.

The New York Times reports that Spotify has been speaking to the European Commission for five years, claiming that Apple’s fee “constituted a tax that violated competition laws and merited an investigation.” In March, an unidentified e-book and audiobook distributor filed a similar complaint.

“At the heart of our case is the fact that Apple acts as the stadium owner, referee and player, and tilts the playing field in favor of its own services,” said Spotify chief legal officer Horacio Gutierrez. “This case is not just about Spotify. The commission’s decision to take on this case against Apple is an important first step toward developing new rules of the road that will govern the conduct of online platforms for years to come.”

The European Commission’s position is that “Apple’s 30 percent share of some revenues collected via the App Store raised competitors’ costs, eventually leading to higher prices for consumers.” Spotify, for example,” raised its monthly subscription price to $13 from $10 in 2014 to make up for Apple’s cut.”

With regard to its App Store, NYT notes that its own investigation showed that, “for years it has packed the top of many App Store search results with its own apps, even when they were less popular or relevant than competitors’ offerings.”

Related:
How Apple Is Making the Antitrust Case Against It Stronger, The Verge, 6/17/20
Apple Threatens to Move Basecamp’s New Email App to Trash, Wired, 6/16/20