EU Commission: Apple distorts the competition for streaming subscriptions


The EU Commission accuses Apple of unfair competition in its app store. Apple is discriminating against other providers of music streaming apps, said competition commissioner Margrethe Vestager on Friday based on preliminary findings of an investigation. The commission is investigating, among other things, the allegation that the sales of subscriptions in the apps have to be processed via Apple’s payment platform and that this hinders competitors.

The Commission’s investigation was triggered in March 2019 by a complaint from music streaming market leader Spotify, which competes with Apple Music. In June of last year, the Commission then launched an antitrust investigation. In this process, she has now officially submitted her objections to Apple. The competition watchdogs are taking the next step in an antitrust investigation. Apple now first has the opportunity to reply.

The competition watchdogs expressed concern that Apple users would have to pay higher prices for music streaming subscriptions or that some subscriptions could not buy in their apps. In their preliminary findings, they also concluded that Apple had a dominant market position in the distribution of music streaming applications in the App Store. Vestager emphasized that the company was both a “gatekeeper” and a competitor with its own Apple Music service.

In the App Store, Apple generally levies a 30 percent tax on income from digital items or subscriptions. For subscriptions that run for more than a year, the commission drops to 15 percent – and recently also for developers who earn less than a million dollars a year.

The commission concluded that most streaming providers passed the fee on to their customers with higher prices. Spotify, for example, offered its subscriptions in the iPhone app for 12.99 instead of 9.99 euros per month. A few years ago, however, the service switched to instead selling iPhone customers the subscription via a website in order to avoid the fee. The video streaming service Netflix is ​​also going this way.

With this model, the second competition infringement comes into play from the Commission’s point of view: The providers are not allowed to directly include a link in the app to the website on which the subscriptions can be bought from Apple. Apple counters that, for example, it would not allow a competitor’s electronics market to advertise alongside their own price tags. The iPhone group also points out that Spotify has won more than 100 million subscription customers since it withdrew from in-app purchases in 2016. In addition, Spotify does not pass on the reduction in the fee from 30 to 15 percent to customers.


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