The European Commission is issuing antitrust charges against Apple over concerns about the company’s App Store practices.
The Commission has found that Apple has broken EU competition rules with its App Store policies, following an initial complaint from Spotify back in 2019. Specifically, the Commission believes Apple has a “dominant position in the market for the distribution of music streaming apps through its App Store.”
The EU has focused on two rules that Apple imposes on developers: the mandatory use of Apple’s in-app purchase system (for which Apple charges a 30 percent cut), and a rule forbidding app developers to inform users of other purchasing options outside of apps.
The Commission found that the 30 percent commission fee, or “Apple tax” as it’s often referred to, has resulted in higher prices for consumers.
“Apple’s rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers,” the Commission said in a statement.
“This in turn leads to higher prices for consumers for their in-app music subscriptions on iOS devices.”
The EU has also sent Apple a statement of objections, which is essentially a list of how the Commission believes Apple has violated competition rules.
This is the initial, formal stage of antitrust proceedings against Apple, and the company will have the chance to respond to the Commission’s list of objections within the next 12 weeks.
This specific case is limited to Apple’s App Store practices for music streaming, and the EU is investigating additional separate cases on ebooks and the App Store in general.
“This is not the last case we will have when it comes to the App Store,” said European commissioner Margrethe Vestager in a press conference.
Apple now faces a fine of up to 10 percent of its annual revenue if it’s found guilty of breaking EU rules, which could be as high as $27 billion based on Apple’s annual revenue of $274.5 billion last year. Apple could also be forced to change its business model, which has more damaging and lasting effects than a fine.