The European Union says the App Store’s 30% cut is squeezing Apple’s competitors. Apple says its rivals (ahem, Spotify) are asking for “free ride.”
From “EU launches Apple antitrust probe focusing on whether App Store and Apple Pay ‘distort competition’” posted Tuesday on Fortune.com:
Apple faces a twin-pronged attack from European Union antitrust chief Margrethe Vestager amid concerns the U.S. tech giant’s App Store and Apple Pay services squeeze developers and potential rivals.
Just four years after hitting Apple with a record-breaking tax bill, Vestager has switched her attention to the iPhone maker’s market power.
The EU will review whether Apple’s app store violates competition law by requiring developers to accept a 30% commission for every sale on Apple’s platform. Watchdogs will also examine how Apple limits “tap-and-go” functionality to its own Apple Pay product.
“It appears that Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple’s popular devices,” Vestager said in a statement on Tuesday. “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”…
Apple said that the EU is responding to complaints from rivals that “simply want a free ride, and don’t want to play by the same rules as everyone else.”
“It’s disappointing the European Commission is advancing baseless complaints from a handful of companies,” Apple said in a statement. “At the end of the day, our goal is simple: for our customers to have access to the best app or service of their choice, in a safe and secure environment.”
My take: Apple tends to lose these battles in the EU. So far the penalties have been nothing they can’t afford.
Update from the WSJ ($):
If found guilty, Apple could face a fine of up to 10% of its annual revenue and be forced to adjust its business practices.