EU Launches Antitrust Investigations against Apple for Apple Pay and App Store IAPs

Apple Pay rumored to launch in Czech Republic soon

The European Commission has launched two formal investigations against Apple for rules related to In-App Purchases (IAPs) in the App Store and Apple Pay.

The investigation related to the App Store will assess whether Apple’s rules for app developers in forcing them to distribute apps via the App Store violates EU’s competition rules or not. Particularly, it will check if Apple is forcing developers to use its own mechanism for IAPs instead of other cheaper alternatives. Apple charges app developers a 30% commission for all subscriptions through IAPs. It also restricts developers from not informing customers about alternative options. For example, Spotify does not offer IAPs in its iPhone app. Instead, users need to directly sign up for the subscription from its website. This allows the company to bypass the 30% commission it would have otherwise had to pay to Apple. However, it cannot highlight this inside its app as it violates the App Store rules.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Mobile applications have fundamentally changed the way we access content. Apple sets the rules for the distribution of apps to users of iPhones and iPads. 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 move comes after separate complaints from Spotify and Kobo, an ebook distributor. Spotify had filed a complaint against Apple last year while Kobo filed one in March this year.

Additionally, the EU will also be investigating Apple Pay to see if it violates the EU competition rules or not. This will include how Apple limits NFC access to itself thereby limiting competition. This antitrust investigation comes following a preliminary investigation which raised concerns regarding “Apple’s terms, conditions, and other measures related to the integration of Apple Pay for the purchase of goods and services on merchant apps and websites on iOS.”

Apple has already issued a statement on this matter calling the move from the EC as disappointing since it is advancing “baseless complaints.”

“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.”

The EU will carry out the investigations against Apple on a priority basis, though the results are unlikely to be out anytime soon.

[Via European Commission, 2]