The European Union is strengthening its efforts to rein in the power of tech giants, with Apple now under scrutiny for its App Store rules governing music streaming services. This move follows a complaint filed by Spotify almost four years ago, accusing the tech giant of monopolistic practices.
The EU regulators are expected to announce a ruling early next year, potentially prohibiting Apple from blocking music services like Spotify from directing users to alternative subscription options outside the App Store.
In 2019, Spotify accused Apple of coercive behavior, claiming that the tech giant compelled app developers to use the App Store’s payment system, resulting in unfair competition. The EU initiated an investigation, and in 2021, a preliminary report found Apple in breach of EU laws regarding promotion restrictions. However, the report did not address the App Store payment issue. Despite Apple’s claims of rule changes, the EU continues to scrutinize the tech giant’s practices.
No more Apple tax? EU ruling could mean cheaper music for Spotify users
If the EU ruling is implemented, Apple may face a fine of up to 10% of its annual sales. While such penalties rarely reach that level, orders for business model changes could have more significant impacts. This potential fine and regulatory action stems from concerns that Apple’s App Store rules hinder fair competition and result in higher costs for consumers.
One of the main points of contention is Apple’s “anti-steering” rule, which prevents apps from informing users about alternative payment methods within the app. Spotify has been vocal about this, arguing that it limits fair competition and allows Apple to charge a substantial commission (15% to 30%) on in-app purchases.
Spotify, unable to offer its usual subscription price within its iPhone app due to Apple’s commission structure, has been lobbying against Apple’s dominance. The music streaming service has been a driving force behind the EU investigation, seeking regulatory intervention to address what it deems anti-competitive practices.
The EU ruling is expected to focus on the “anti-steering” rules and their impact on music streaming services. However, broader changes could be on the horizon, especially with the impending Digital Markets Act, potentially compelling Apple to open up the iPhone to third-party app stores and sideloading.
(via Bloomberg)
