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EU charges Apple in landmark App Store competition case

Alex PIGMAN
·3-min read

The EU formally accused Apple on Friday of unfairly squeezing out music streaming rivals through its App Store in one of the biggest-ever competition cases to hit the iPhone maker.

The charge sheet lands as Apple faces a rebellion from firms that want to break free of its global online store's strict terms and fees, with authorities in the US, Russia, Britain and South Korea also circling on the world's biggest company.

"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," EU competition commissioner Margrethe Vestager said in a statement.

"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," she added.

The European Commission's case, put forward in a "statement of objections", is based on a complaint brought by Sweden-based Spotify and others that accuses Apple of making unfair use of the App Store to promote its own Apple Music.

Apple firmly rejected the accusations, alleging that Spotify wants "all the benefits of the App Store but don't think they should have to pay anything."

The EU's case was "the opposite of fair competition," the company spokesperson added.

- Fortnite battle -

The case stems from a Spotify complaint in 2019 that also accused Apple of unfairly taking a 30 percent cut from businesses using its store.

Spotify's head of global affairs Horacio Gutierrez hailed the EU's move as "a critical step toward holding Apple accountable for its anticompetitive behaviour."

This would ensure "meaningful choice for all consumers and a level playing field for app developers," he added.

The case is one of several taken up by the European Commission against Apple last year and could force the company to change the way it does business.

The other cases focus on the Apple Pay system as well as the company's eBooks offering.

Epic Games, the maker of the massively popular video game Fortnite, has also lodged a complaint in Europe, part of that firm's global campaign to fight the App Store's conditions to do business.

A blockbuster trial between the two companies is set to begin May 3 in San Francisco with Apple chief Tim Cook expected to testify and defend the App Store.

- 'Critical step' -

At the heart of all the cases is Apple's role as an internet gatekeeper, in which other developers, startups and rivals have no other choice than to meet the company's demands in order to reach the company's one billion iPhone users.

The EU is currently preparing an ambitious law, known as the Digital Markets Act, that will set up special rules for gatekeepers and protect consumers, companies and potential rivals from their overwhelming market power.

Apple now has the chance to defend its side and offer to tweak its business model to satisfy the EU, which can also impose fines up to 10 percent of the company's annual turnover.

"I do think that solutions can be found so that we have fair competition," Vestager told reporters.

"But for now, of course, what we want is for Apple to answer to our concerns, and they will have 12 weeks to do so," she added.

The case comes as Apple is also gearing up for an epic battle with Facebook over its new policy on better protecting the personal data of iPhone users, a move that would force a major change in how its big tech rivals do business.

Apple was previously in the EU's crosshairs four years ago when Brussels ordered the California-based giant to repay 13 billion euros ($14.7 billion at current rates) in a tax case against Ireland.

That decision was overturned by an EU court, but the European Commission filed an appeal after the setback.

Apple shares were 0.9 percent lower in morning trading in New York.

arp/rl