EU Regulators Plan Apple Probe After Spotify Antitrust Complaint

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Spotify accused Apple of misusing its dominant iPhone App Store to charge a ‘tax’ on rival music services

The European Commission is reportedly set to launch a formal antitrust probe against Apple, following a complaint by Spotify earlier this year.

The investigation is set to be announced in the next few weeks, the Financial Times reported.

Spotify, which last month reached 100 million paid subscribers, is the market leader in music streaming services and is one of Europe’s few significant tech players.

But it faces intensifying competition from the likes of Apple, Amazon and Google.

EU competition commissioner Margrethe Vestager. // European Commission

App Store ‘tax’

In March the Swedish company filed a complaint in which it accused Apple of unfairly using the dominance of its mobile App Store to give the Apple Music service a competitive advantage.

The complaint centres on Apple’s policy of charging digital content providers a 30 percent fee for using its payment system for subscriptions sold in the App Store.

Music services such as Spotify and Deezer must pay the fee, which doesn’t apply to services such as Uber or Deliveroo.

Apple faces fines of up to 10 percent of its turnover, and could be required by EU regulators to change its business practices.

Companies targeted by the Commission also have the option of settling probes through formal undertakings that they will modify their policies.

“The Commission has received a complaint by Spotify, which we are assessing under our standard procedures,” a European Commission spokesman said.

“Apple requires that Spotify and other digital services pay a 30 percent tax on purchases made through Apple’s payment system, including upgrading from our free to our premium service,” said Spotify co-founder and chief executive Daniel Ek in a blog post at the time the complaint was filed.

“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. And to keep our price competitive for our customers, that isn’t something we can do.”

Competition

He said the App Store rules should apply equally to all competitors, including Apple Music.

“We provide the platform by which users download and update their app,” said an Apple spokesman. “We share critical software development tools to support Spotify’s app building. And we built a secure payment system – no small undertaking – which allows users to have faith in in-app transactions.

“Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue.”

The Commission has a record of targeting major US tech companies, including Apple itself, which EU competition commissioner Margrethe Vestager forced to pay 13 million euros (£11.3m) in back taxes in 2017, in a case that is under appeal.

Google has been made to pay 8bn euros in three separate competition cases, and Microsoft paid about 2bn euros in fines in the 2000s.

The Commission has also carried out major enforcement actions against non-US multinationals including Russia’s Gazprom, France’s Areva and Germany’s Siemens.

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