Technology

Following Spotify’s complaint, Brussels is preparing to launch an action against the App Store

The European Commission, responsible for enforcing competition law within the European Union, is said to be on the verge of launching a formal indictment against Apple, reports the Financial Times in an article published on April 27. The Brussels authority has not yet officially communicated on this procedure.

The App Store in the viewfinder

These antitrust charges relate to the management by the American giant of its application store, the App Store. Following a complaint initiated by the Swedish company Spotify in March 2019, the Commission opened an investigation in mid-June 2020.

In practice, the European executive is preparing to send Apple what is called “a statement of objections”, a preparatory document aimed at informing the entity targeted by the investigation procedure of the grounds for the complaint. The Cupertino company will be able to respond to these accusations within a given period.

these restrictions harm competition

In detail, the Commission is targeting two restrictions imposed by Apple in its agreements with companies wishing to distribute applications through the App Store, such as Spotify. It is concerned that these clauses will distort competition from music distribution services. Indeed, the Swedish company is in direct competition with Apple Music in this market (as well as in that of podcasts).

The first restriction concerns the famous 30% tax levied by Apple on the income of any purchase made from an application on its store, even if it is a recurring subscription. These “in-app purchases” must go through its proprietary payment system. The company then charges app developers a 30% commission on all subscription fees when purchased directly from an app.

Deprives competitors of valuable data

The Commission noted last June, when opening its investigation, that this obligation seemed to allow Apple to “fully control the relationship of its competitors with their customers” who subscribe in applications. This would prevent its competitors from having important data about their customers, while Apple can gain valuable data on the activities and offerings of its rivals.

This 30% tax is also at the heart of a conflict between the American firm and a group of developers gathered in an association called “Coalition for App Fairness”. It is led by Epic Games, which has been in conflict with Apple for several months over its Fortnite game. To calm these tensions, Apple announced last November the introduction of a new commission rate of 15% for developers who have achieved less than a million dollars in turnover over a year.

But this new policy did not concern all developers, and in particular not Epic Games. Indeed, the publisher of the graphics engine Unreal Engine has earned more than $ 1.2 billion on the App Store, which de facto excludes the 15% commission. The second disputed clause concerns the restriction for developers to inform their users of other possibilities for purchasing and especially subscription outside of applications, for example via a website, which are much less expensive because Apple cannot do so. take its share.

Apple is a “gatekeeper”

Margrethe Vestager, Executive Vice-President in charge of competition policy at the European Commission, recalls that by fixing unilaterally “the rules applicable to the distribution of applications to users of iPhones and iPads“, Apple becomes a” gatekeeper “. This English term designates an entity capable of authorizing or prohibiting access to a resource.

If these accusations turn out to be true, Apple faces a fine of up to 10% of its global revenue, or $ 111.4 billion in 2020 (up 21% from the previous year) .

Procedures are multiplying

The European Commission is stepping up proceedings against technological giants. In November 2020, she opened a new investigation into Amazon’s “Buy box” and “Prime” label. “The conditions of competition on Amazon’s platform must also be level. Its rules should not artificially favor Amazon’s retail offerings or favor the offerings of retailers who use its logistics and delivery services.“, explained Margrethe Vestager.

Brussels also intends to increase the pressure on these companies through future legislation: the “Digital Markets Act” (DSA). This text, for example, provides for a series of obligations and prohibitions that gatekeepers must comply with. For example, they will have to allow third parties to interact with their own services and allow professional users to access the data they generate when using the platform.

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