Earlier this week, it was reported that the European Commission would bring antitrust charges against Apple soon for breaking competition laws. Now, everything is official, with the commission finding that Apple is “in breach of EU competition law” with its 30 percent revenue cut and other iOS policies.
The EU investigation began in early 2020, following a complaint from Spotify in 2019. Spotify took issue with Apple taking a 30 percent revenue cut from subscriptions on iOS. Spotify also had some other complaints regarding competition after the launch of Apple Music, Apple’s own music streaming service.
Our preliminary conclusion: @Apple is in breach of EU competition law. @AppleMusic compete with other music streaming services. But @Apple charges high commission fees on rivals in the App store & forbids them to inform of alternative subscription options. Consumers losing out.
— Margrethe Vestager (@vestager) April 30, 2021
The European Commission believes that Apple has a “dominant position” when it comes to music streaming through the iOS App Store. The commission takes issue with the mandatory use of Apple’s own in-app purchase system for rival apps, as well as a rule forbidding developers from telling iOS users to use purchase options outside of the iOS app. The reason Apple does this is so that it can continue to take a 30 percent revenue cut from purchases made on its platform.
A statement from the commission says: “Apple’s rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers. This in turn leads to higher prices for consumers for their in-app music subscriptions on iOS devices.”
These are just the commission’s preliminary findings after a year of investigation, so no actions have been taken against Apple yet. We do know what punishments Apple could face, however, as the EU can fine up to 10 percent of a company’s annual revenue for breaking its laws. A full 10 percent fine for Apple in 2021 would work out to around $27 billion.
KitGuru Says: Apple’s 30 percent revenue cut is being attacked on multiple fronts at the moment. Not only do Apple’s lawyers have to worry about EU fines, but they are also about to try and fend off a massive lawsuit from Epic Games. Apple has not responded to the EU’s findings yet, but we should see a statement released soon.