EU charges Apple in landmark App Store competition case

The EU formally accused Apple today 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 the global Apple App 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.

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.

Spotify filed the complaint in 2019 that also accused Apple of unfairly taking a 30 per cent cut from businesses using its store, which Spotify says amounts to a violation of fair competition rules.

The case is one of four 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.

Gatekeeper

At the heart of 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 hundreds of millions of consumers.

The EU is currently preparing an ambitious law, known as the Digital Market 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 per cent of the company’s annual turnover.

Apple was not available immediately for comment, but in a 2019 statement it said the accusations were unfounded since its App Store helped Spotify become Europe’s largest music streaming service.

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 (RM60.3 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.