Apple Could Be Fined $27 Billion In Antitrust Streaming Case — Heres Why

Apple Could Be Fined $27 Billion In Antitrust Streaming Case — Here’s Why

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Following a 2019 complaint from Spotify, the EU is now charging Apple for anti-competitive practices with the App Store and Apple Music.

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Apple Could Be Fined $27 Billion In Antitrust Streaming Case — Heres Why

Apple is facing an antitrust fine of up to $27 billion, with the European Commission accusing Apple of violating competition laws set by the organization. This news comes just days before Epic Games is set to take the company to court over its own antitrust concerns, making it even more evident that Apple’s business practices may come with serious consequences.

This latest charge from the EU is happening because of an antitrust complaint that Spotify issued in 2019. On March 13 of that year, Spotify reached out to the EU with concerns about how Apple runs the App Store — specifically, the 30 percent cut Apple takes from in-app purchases, such as upgrading to Spotify Premium through the App Store on an iPhone. Spotify argued this put it and other streaming services at a disadvantage to Apple Music, which obviously isn’t subject to the same kind of fee. As Spotify CEO Daniel Ek said at the time, “If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music.” Furthermore, Ek noted that if Spotify chose not to use Apple’s built-in payment system with the App Store, Apple limits Spotify’s communication with customers and locks it out of certain features (such as not having deeper Spotify integration on the HomePod or Apple Watch).

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Over two years later, the EU has used Spotify’s complaint to press formal charges against Apple. According to a press release from the organization, it has “informed Apple of its preliminary view that it distorted competition in the music streaming market as it abused its dominant position for the distribution of music streaming apps through its App Store.” With this charge, Apple could be fined up to 10 percent of its total annual revenue. Considering Apple raked in $274.5 billion in 2020, that would result in a fine of more than $27 billion. Furthermore, the EU could force Apple to change how it polices in-app purchases and subscriptions in the App Store.

The EU Accuses Apple Of Breaking Two Competition Rules

The charges line up pretty closely with Spotify’s initial complaint, with the EU accusing Apple of breaking two main rules. First, the EU is calling out the App Store’s 30 percent fee that app developers are forced to pay when conducting business through the platform. According to the EU, “The Commission’s investigation showed that most streaming providers passed this fee on to end users by raising prices.” If Apple Music and Spotify both charge $10/month for their streaming service but only Spotify has to hand over 30 percent of its revenue, that’s a problem. The second rule has to do with Apple preventing developers from informing users of ways to subscribe to their services outside of the App Store (such as through their website). Once again, the EU says, “While Apple allows users to use music subscriptions purchased elsewhere, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper.”

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Following the EU’s announcement, Apple was quick to defend its position in all of this. In a statement sent to The Verge, Apple argues 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.” Apple says that Spotify wanting to advertise “alternate deals” in its iOS app is something that “no store in the world” would allow.

As for what happens next, Apple has 12 weeks to object to the EU’s charges and give an official stance on why it’s in the clear. It’s difficult to say what’ll happen after that and how quickly a conclusion will be reached, but what is clear is that the EU is coming for Apple in a big way. Furthermore, while this specific charge focuses on the App Store’s impact on music streaming, the EU has confirmed this won’t be the last charge it places against the platform.

Link Source : https://screenrant.com/apple-spotify-eu-antitrust-streaming-case-explained/

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