Recently, the EU Commission preliminary stated that Apple with its App Store commission on mandatory in-app purchase system (IAP) and anti-steering provisions, which prevent users from being informed about alternatives, distorts the competition. Now Apple has 12 weeks for official response.
What is IAP?
IAp or in-app purchase system is the element of an App Store application with which user/customer is able to make an in-app transaction to buy a subscription or any stuff inside an app. For that kind of utility, Apple charges about 30% of the initial price.
Why is that important?
You may say that Apple has created their marketplace platform on their iOS. This marketplace is again on their Iphones or IPads. Hereby they are the ones who can charge apps such a price and, as Fortnite case showed us, you will be absolutely right. At the same time there is one but. Apple owns Apple Music. With that argument, Spotify claims that they have unfair price advantage as they can charge customer 30% less and earn the same amount of profits or they can pay more to the musicians. This actually happens as Apple pays $0.0076 per stream while Spotify pays in the range of $0.0026-0.0049.
What is anti-steering provisions?
Basically, anti-steering provisions is the tool that limits the ability of app developers to inform users about alternative purchasing possibilities outside apps.
The influence of the feature
We know that Apple cuts 30% from in-app transactions. The logical behavior of the developer is to offer a purchase outside the app, which is allowed by App Store rules. Nonetheless, it is really a burden to inform a user about such possibility as there are restrictions on that notion.
Back to the Case
In response to Commission’s allegation Apple stated that at this timeframe Spotify leads the market of music streaming and 99% of their users have no connection to IAP. Moreover, they have said that Apple charges only 15% of Spotify subscription. They have also added that Spotify wants all the benefits of Apple’s marketplace and does not want to pay a penny for that which is unfair competition.
Below you can see how Spotify’s founder, Daniel Ek reacted to Antitrust case
Apple has been struggling with antitrust cases for a while now. All of the proceedings by now have been won by Apple. However, if only once in a blue moon they are punished it will lead to even more allegations towards Apple monopoly. In that case, Apple will lose tons of reputation and money earned on commission.