Europe opens antitrust investigation into Apple’s App Store rules for developers

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The European Commission has opened antitrust investigations into whether Apple’s rules for developers who distribute their apps via the company’s App Store violate EU competition rules.

The EC said its investigations examine how developers are required to use Apple’s own in-app purchase system, and restrictions on the ability of developers to tell iPhone and iPad users about alternative and cheaper ways of buying content outside of apps.

The investigations follow up on separate complaints by Spotify and by an e-book/audiobook distributor on the impact of the App Store rules on competition in music streaming and e-books/audiobooks.

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Margrethe Vestager, the EC executive vice-president in charge of competition policy, said that apps have fundamentally changed the way we access content.

“We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers, for example with its music streaming service Apple Music or with Apple Books. I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”

The EC said it will investigate two restrictions imposed by Apple in its agreements with companies wanting to distribute apps to users of Apple devices.

First is the required use of Apple’s own proprietary in-app purchase system for the distribution of paid digital content: Apple charges app developers a 30% commission on all subscription fees through in-app purchases.

Second, it will look at restrictions on the ability of developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to consume content such as music, e-books and audiobooks purchased elsewhere (such as via the website of the app developer) inside their apps, the company’s rules prevent developers from telling users about these options — which are usually cheaper.

In March last year, Spotify filed a complaint about the two rules in Apple’s licence agreements with developers and the associated App Store Review Guidelines, and their impact on competition for music-streaming services.

Apple’s competitors have either decided to disable the in-app subscription possibility altogether, or have raised their subscription prices in the app and passed on Apple’s fee to consumers. In both cases, they were not allowed to inform users about alternative subscription possibilities outside of the app, the EC said.

In March this year, an e-book and audiobook distributor also filed a complaint against Apple, which competes with the complainant through its Apple Books app. This complaint raises similar concerns to those under investigation in the Spotify case, but with regard to the distribution of e-books and audiobooks.

SEE: Facebook’s approach to content moderation slammed by EU commissioners

In parallel, the EC has also opened a formal antitrust investigation to assess whether Apple’s conduct in connection with Apple Pay violates EU competition rules.

The Commission said it will now investigate the possible impact of Apple’s App Store practices in particular on competition in music streaming and e-books/audiobooks. There is no legal deadline for bringing an antitrust investigation to an end.

Apple said in a statement: “We follow the law in everything we do and we embrace competition at every stage because we believe it pushes us to deliver even better results.”

The company added: “It’s disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride, and don’t want to play by the same rules as everyone else. We don’t think that’s right — we want to maintain a level playing field where anyone with determination and a great idea can succeed.”

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