Apple: EU opens major investigation into App Store and Apple Pay

Critics argue iPhone maker unfairly uses its dominance of its platforms 

Andrew Griffin
Tuesday 16 June 2020 14:31 BST
Craig Federighi , Senior Vice President of Software Engineering at Apple, speaks about programming during the keynote address at the Apple World Wide Developers Conference
Craig Federighi , Senior Vice President of Software Engineering at Apple, speaks about programming during the keynote address at the Apple World Wide Developers Conference

The EU has opened a major investigation into Apple over concerns that it uses its platforms unfairly.

The EU commission will pursue antitrust investigations against the company over its App Store and Apple Pay products, which critics argue have stifled competition.

The Commission said it was investigating Apple Pay over allegations the tech giant wields its control over the Pay platform to force developers into using it over others.

It said a preliminary investigation had raised concerns that "Apple's terms, conditions, and other measures related to the integration of Apple Pay" may "distort competition and reduce choice and innovation".

In addition, the EU Commission announced it had opened a second investigation into concerns that the firm's App Store restricts developers from informing iPhone and iPad users of alternative purchasing possibilities, instead pushing "mandatory use of Apple's own proprietary in-app purchase system".

Apple said it welcomed the opportunity to show that it gave customers "access to the best app or service of their choice, in a safe and secure environment".

In a statement on the App Store probe, EU Commission executive vice-president Margrethe Vestager said: "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.

"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 App Store investigation follows complaints from some rivals, including Spotify, which last year alleged that Apple's rules were restrictive and anti-competition, arguing Apple's 30% tax on purchases made through the payment system on its app store make it anti-competitive because it has its own streaming service - Apple Music.

Apple denied those allegations at the time and accused Spotify of seeking to keep the benefits of being on its app store without "making any contributions to that marketplace", arguing the majority of Spotify users on Apple's iOS platform used the free version of the app and so did not contribute to this revenue stream.

Responding to the EU Commission's announcement, Spotify said: "Apple's anti-competitive behaviour has intentionally disadvantaged competitors, created an unlevel playing field, and deprived consumers of meaningful choice for far too long.

"We welcome the European Commission's decision to formally investigate Apple, and hope they'll act with urgency to ensure fair competition on the iOS platform for all participants in the digital economy."

On the EU Commission's Apple Pay investigation, Ms Vestager said: "It appears that Apple sets the conditions on how Apple Pay should be used in merchants' apps and websites.

"It also reserves the 'tap and go' functionality of iPhones to Apple Pay.

"It is important that Apple's measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices.

"I have therefore decided to take a close look at Apple's practices regarding Apple Pay and their impact on competition."

In a statement responding to the announcements, Apple said it had created "groundbreaking new products and services" in some of the most competitive markets in the world, but that the company "follow the law in everything we do" and "embrace competition at every stage".

The technology giant added: "We developed the App Store with two goals in mind: that it be a safe and trusted place for customers to discover and download apps, and a great business opportunity for entrepreneurs and developers.

"We're deeply proud of the countless developers who've innovated and found success through our platform.

"And as we've grown together, we've continued to deliver innovative new services - like Apple Pay - that provide the very best customer experience while meeting industry-leading standards for privacy and security.

"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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