Tag Archives: competition

Apple may have to pay a fine which amounts to $27 billion

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EU has accused Apple of improper competition practices. The Commission accused Apple of breaching EU rules of fair competition as they believe Apple holds a dominant position – specifically in the market of music streaming.

Apple’s App Store charges a 30% commission fee on all subscriptions bought through their system. On top of that, they forbid advertising other subscription options through their app on the App Store. If you remember their dispute with Epic Games, Fortnite was kicked from the App Store exactly for breaching their latter part of the policy mentioned.

EU claims that Apple is distorting what was supposed to be a healthy competition and that ultimately the system takes toll on the customers, due to the fact that companies partnering with Apple have to up their prices in order to combat the 30% ‘Apple tax’.

If Apple is found guilty they will have to face a fine of 10% of annual revenue which accounts to $27 billion, and adjust their business model so that it works in a way that doesn’t affect healthy competing.

Apple responded to the accusations with:

“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store. At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”

Spotify has its own take:

“Today is a big day. Fairness is the key to competition… we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers.”

“Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications. The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers.”

Another parties also join in opposing apple in their anticompetitive practices as Apple is pressured the situation is yet to escalate, although slowly Apple is seen taking a step back – lowering the % fee, and skipping it for some services. We have yet to see what will happen as Apple is pressed with more and more antitrust complaints.

resources:

https://www.theverge.com/2021/4/30/22407376/apple-european-union-antitrust-charges-app-store-music-competition-commission-margrethe-vestager

https://techcrunch.com/2021/04/30/europe-charges-apple-with-antitrust-breach-citing-spotify-app-store-complaint/

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