European Commission Opens Investigation Into App Store by Apple

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On June 16, 2020, Brussels, the European Commission (EC) made a press release. The European Commission has opened a formal antitrust investigation. It is to assess if Apple’s rules for app developers are applicable to the distribution of apps.

The Press Release 

The Aim is to see if distribution via the App Store flouts EU Competition rules. The EC also opened a formal antitrust investigation. This was to assess Apple’s conduct about Apple Pay.

 The Commission will examine two restrictions about the former. Apple restricts companies (via agreements) intending to distribute apps to Apple device users in the following manner:

 1. The mandatory use of Apple’s own proprietary in-app purchase system “IAP”. This allows the distribution of paid digital content. But a 30% commission is payable by the app developers, on all subscription fees through IAP.

2. The restrictions imposed on app developers forbid them to inform users of alternative purchasing options outside of apps. The users are allowed to use content like music, e-books and audiobooks purchased, for instance, on the app developer’s website. However, as per Apple’s rules, the developers cannot inform users about such purchasing possibilities which are cheaper. As a result, there is a competition with Apple’s apps and services in the European Economic Area (EEA). 

 The Complaints

1. Spotify is a music streaming provider and also a competitor of Apple Music. On March 11, 2019, Spotify filed a complaint. It was about the two rules contained in Apple’s license agreements along with the associated App Store Review Guidelines. The need was to assess the repercussion of music streaming services on the competition. 

As per the preliminary investigation, the Commission is of the opinion that “Apple’s restrictions may distort competition for music streaming services on Apple’s devices”. The IAP mandate authorizes Apple to control the relationship of subscribing customers with its competitors. Apple, while in charge, may collect valuable data on activities. As well as offers given out by its competitors.

 2. An e-book and audiobook distributor too filed a complaint against Apple on March 4, 2020. The complainant is Apple’s competitor through its Apple Books app. The concerns surfaced are like the ones already investigated in the Spotify case.

What does the Investigation Entail?  

1. The Commission has to conduct an investigation. This is on the effect of Apple’s App Store practices on the competition. It needs to examine if such practices shield consumers from better options and lower rates. 

2. These allegations, when proven, will establish a breach of the following: 

a.)  Article 101 of the Treaty on the Functioning of the European Union (TEFU) -EU competition rules on anti-competitive agreements between companies. 

b.) Article 102 (TEFU)- Prohibition of the abuse of a dominant position.

The Antitrust Regulation (Council Regulation No 1/2003) defines the implementation of these provisions. In addition to that, the national competition authorities can also apply the same. However, Article 16(1) of the Antitrust Regulation forbids the national courts from adopting decisions in contravention to the EC’s decision in proceedings already undertaken by them.

Hence, as per due procedure, the European Commission has apprised Apple and the competition authorities of the Member States about opening proceedings in these cases. 

Margrethe Vestager is the Executive Vice-President and the in-charge of the competition policy. He announced that the compliance of the Apple’s App Store rules with the EU Competition rules will be observed.


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