Apple accused of distorting music streaming market

By Mark McSherry

European Commission regulators have accused Apple of distorting competition in the music streaming market “as it abused its dominant position for the distribution of music streaming apps through its App Store.”

The EC’s “preliminary view” on the matter follows a complaint by Sweden’s Spotify.

The Commission said it “takes issue with the mandatory use of Apple’s own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple’s App Store.”

The EC said it is also concerned “that Apple applies certain restrictions on app developers preventing them from informing iPhone and iPad users of alternative, cheaper purchasing possibilities ”

The Commission said its “Statement of Objections” concerns “the application of these rules to all music streaming apps, which compete with Apple’s music streaming app Apple Music in the European Economic Area (EEA).”

The Commission’s executive vice-president Margrethe Vestager, in charge of competition policy, said: “App stores play a central role in today’s digital economy.

“We can now do our shopping, access news, music or movies via apps instead of visiting websites.

“Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store.

“With Apple Music, Apple also competes with music streaming providers.

“By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition.

“This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”

If the case is pursued, the EU could demand concessions from Apple and potentially impose a fine of up to 10% of Apple’s turnover, which could be as much as $27 billion — but the Commission rarely levies the maximum penalty.

Apple rejected the EU charge.

Apple told Reuters: “Spotify has become the largest music subscription service in the world, and we’re proud of the role we played in that.

“They want all the benefits of the App Store but don’t think they should have to pay anything for that.

“The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”

Spotify welcomed the EU move as “a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers.”